Stronger South-South trade opens new growth opportunities for developing countries

Islamabad, Oct 31,2026:     Expanding trade among developing economies is strengthening prospects for export growth, regional economic cooperation and industrial development, as changing global supply chains create new opportunities for emerging markets to diversify trade partnerships and increase their participation in international commerce.

The growing importance of South-South trade comes amid major changes in global commercial relationships, driven by geopolitical tensions, technological restrictions and efforts by businesses to diversify suppliers and markets.

According to UN Trade and Development (UNCTAD), global trade reached a record $35 trillion in 2025, while merchandise trade among developing economies increased by approximately 17%, highlighting the expanding role of South-South commerce in the international trading system.

UNCTAD’s Trade and Development Report 2026 also projects slower global economic growth as geopolitical rivalries and technological restrictions reshape international trade. Shifting US-China commercial relations and expanding intra-Asian trade are creating new opportunities for developing economies, although the benefits will depend on their industrial capabilities and export competitiveness.

Economic analyst and former Secretary-General of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Shahid Anwar told Wealth Pakistan that changing trade relationships were encouraging governments and businesses to explore alternative suppliers and markets.

“This is creating new opportunities for developing economies, particularly in Asia,” he said, adding that the benefits of expanding international trade would not necessarily be distributed equally.

Anwar explained that geopolitical tensions and trade restrictions were prompting countries to reduce dependence on traditional trading partners and develop new commercial relationships.

He said expanding trade among Asian and other developing economies could create opportunities for exporters, manufacturers and investors, particularly in countries with competitive industrial sectors and reliable supply chains.

However, he cautioned that higher global trade values did not necessarily represent an equivalent increase in the volume of goods exchanged.

According to Anwar, part of the increase in global trade value reflected higher prices, particularly for energy, rather than a corresponding expansion in physical trade volumes.

He noted that countries with stronger industrial bases, better technological capabilities and greater export capacity would be better positioned to benefit from changing international trade patterns.

The growing importance of South-South commerce could also encourage greater regional economic integration, allowing developing economies to strengthen supply chains and expand access to markets beyond traditional trading partners.

However, Anwar warned that the fragmentation of the global economy into competing trade blocs could increase costs, disrupt supply chains and limit opportunities for countries without strong economic partnerships.

Economies facing high production costs, weak industrial capabilities and limited access to modern technologies could struggle to secure a meaningful share of emerging trade opportunities, he said.

For Pakistan, the changing global trade environment offers opportunities to diversify export destinations, strengthen regional commercial ties and attract new business as international companies reassess their supply chains.

Anwar cautioned, however, that changing trade flows would not automatically translate into additional export orders for Pakistan.

He said international buyers would continue to prioritise competitive prices, consistent product quality and reliable delivery schedules when selecting suppliers.

Pakistan would therefore need to lower energy and production costs, improve industrial productivity, meet international quality standards and diversify its export base to benefit from emerging opportunities.

“The real challenge is not simply to find new markets, but to become competitive enough to capture them and gain greater value from what we produce,” he said.

Anwar added that countries investing in productive capacity and technological development would be better placed to benefit from changing global trade patterns, while those failing to strengthen their industries risked falling further behind.

Nadia Hassan, a research fellow at the Pakistan Institute of Development Economics (PIDE), said expanding commercial ties among developing economies were creating opportunities for regional integration, even as geopolitical tensions contributed to the fragmentation of global trade.

Citing UNCTAD data, she pointed to the approximately 17% increase in merchandise trade among developing economies in 2025 as an indication of the growing importance of South-South commerce and regional trade networks.

However, Hassan emphasised that expanding trade among developing countries would not automatically eliminate economic disparities between emerging and advanced economies.

She said the ability to translate new commercial relationships into sustained economic growth would depend on technological advancement, financial resources, industrial productivity and access to competitive supply chains.

“Economic benefits are not a natural by-product of shifting supply chains and nearshoring,” she said, stressing that countries needed sufficient productive capacity to compete effectively for investment and export orders.

Hassan explained that developing economies faced the challenge of capturing opportunities created by expanding intra-Asian and South-South trade while managing risks associated with competing economic blocs and selective supply-chain realignment.

Countries with limited industrial capabilities could be bypassed as international businesses concentrated production in locations offering stronger infrastructure, technological expertise, financing and reliable trade arrangements.

She said developing economies needed deeper regional integration, more efficient trade facilitation, technology-enabled payment systems and sustained investment to strengthen their participation in international commerce.

For Pakistan, these developments underline the importance of improving domestic production capabilities, promoting export diversification and strengthening regional economic partnerships.

Greater integration into emerging trade networks could help Pakistani businesses access new markets, attract investment and participate in higher-value segments of international supply chains.

However, realising these opportunities would require improvements in industrial efficiency, technology adoption, trade infrastructure and the overall cost of doing business.

The continued expansion of South-South trade could strengthen the role of developing economies in global commerce, particularly as businesses seek diversified supply chains and alternative markets.
For emerging economies, the longer-term benefits will depend on their ability to translate expanding trade relationships into higher productivity, stronger industrial capabilities, sustained export growth and greater economic competitiveness.