Is the Indian Ocean Economy a New Global Growth Pole?

October 5, 2018   Reading Time: < 1 minute

Reading Time: < 1 min read

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Ganeshan Wignaraja, Adam Collins and Pabasara Kannangara^*

Abstract

This LKI Working Paper examines whether the Indian Ocean economy–comprising 28 states across three continents-can become a growth pole for the global economy. It considers initial conditions, recent trade-led growth, portrays the near and medium context and various policy challenges. It finds that the strategically located Indian Ocean economy has become a pivotal global shipping hub. Its trade and Gross Domestic Product (GDP) have grown faster than the global economy in recent years. Projections suggest that the Indian Ocean economy will likely account for over 20% of global GDP by 2025 and its GDP per capita is expected to almost double to USD 6150. However, realising this outlook will depend on tackling several pressing policy challenges including improving port quality and logistics, lowering barriers to trade and investment, narrowing development gaps and strengthening the regional economic governance. Tackling these challenges requires a combination of coherent national and regional policy measures.

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*Ganeshan Wignaraja is the Executive Director at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) in Colombo. Adam Collins is a Research Fellow at LKI. Pabasara Kannangara is a Research Associate at LKI. All errors and omissions remain the authors’ own. The opinions expressed in this publication are the authors’ and not the institutional views of LKI. They do not necessarily reflect the position of any other institution or individual with which the authors are affiliated.