Geographic tailwinds: The new geography of growth in 2025 and beyond

The current volatility and uncertainty in global markets can seem like a violent storm thrashing your company from all sides. It may be tempting to “batten down the hatches” and ride it out – to play it safe and stick with familiar strategies. But there’s another option: Take a look ahead and track where the winds of change are coming from. That’s what we’re doing at DHL Group: setting our sights on these “geographic tailwinds”.

Here’s what we see right now: The transformation in global trade stems from three critical economic shifts:

1. The "China+X" strategy adopted by many multinational corporations
2. The diversification of global supply chains
3. The influx of domestic and foreign direct investment into strategic economies

These dynamics are creating a new geography of global economic growth – “geographic tailwinds” that will drive rapid growth and reshape the fortunes of many emerging economies through 2030 and beyond. We have our sights set on 20 of them – places where we can build on our local expertise and leverage our global footprint to accelerate our sustainable growth and meet the changing needs of companies with international supply chains.

Read on to learn more about the economic forces at play here and the high-growth regions we are focused on.

Geographic tailwinds refer to the favorable factors or conditions in specific countries or regions that can positively impact business or economic activity. Essentially, we’re talking about fast-growing markets – but the forces driving them go deeper. Let’s dive in for a closer look at the three main shifts taking place:

For decades, China has served as the world's manufacturing hub, offering unparalleled economies of scale, efficient infrastructure, and low production costs. And while China will remain a market any company seeking growth cannot pass by, rising labor costs, geopolitical tensions, and trade uncertainties have prompted multinational corporations to diversify their manufacturing footprint beyond China's borders – a strategy commonly referred to as “China+1” or “China + X”. Especially in Southeast Asia, countries like Thailand, Malaysia, and Vietnam are leading the way.

Beyond the China+X strategy, broader supply chain diversification trends are reshaping global production networks as companies seek to lower risk and increase cost-effectiveness. More and more businesses are adopting a multifaceted approach to manufacturing and sourcing, involving a mix of reshoring, nearshoring, and, more recently, friend-shoring. Near-shoring (relocating production closer to end markets) and friend-shoring (prioritizing production in politically aligned countries) have emerged as dominant strategies in response to pandemic-induced disruptions, geopolitical tensions, and rising transportation costs. For example, US manufacturers have relocated production to Mexico to reduce operating costs and increase proximity to the US market. In Eastern Europe, places like Poland, Hungary, and Romania are in high demand as European companies seek to mitigate the risk of geographic and geopolitical disruption by relocating to regions closer to their target markets.

While production shifts and supply chain diversification drive growth in many emerging markets, others are capitalizing on massive inflows of domestic and foreign direct investment (FDI). Prime examples here can be found in the Middle East, from Türkiye to Saudi Arabia, but also in India and China.

At DHL Group, we’ve been closely monitoring these developments and have adapted our strategic approach accordingly. As part of our Strategy 2030, we’ve launched five growth initiatives, one of which is “Geographic Tailwinds.” Our aim is to expand our presence in geographies that are set to benefit from supply chain diversification. Why? When we grow our business in these regions, we can better help our customers leverage the advantages of a diversified supply chain.

Specifically, we’re focusing our efforts on 20 countries around the world with the greatest potential – our “GT20.” From Brazil and Mexico in the Americas to Poland and Romania  in Europe, and from India and Thailand in the Asia Pacific region to Egypt and the United Arab Emirates in the Middle East and Africa, we’re looking at the places we can help our customers the most by providing better infrastructure, smarter services, and top-of-class supply chain expertise.

Each GT20 market offers unique strengths – and unique opportunities. Let’s look at three examples that demonstrate the diversity and promise of our GT20 initiative:

Located in Central America, Mexico is the 13th largest economy in the world and the second largest in Latin America. Services (led by financial services) and manufacturing (particularly oil and gas, automotive, and electronics) account for significant portions of the economy. Despite challenges such as high inflation and a less supportive global economy, Mexico's long-term growth prospects remain resilient. Geopolitical tensions and the United States-Mexico-Canada Agreement have positioned Mexico as the largest trade partner of the United States, surpassing China and leading to a surge in FDI.

A member of the European Union, Romania boasts the second largest economy in Central and Eastern Europe (CEE), contributing approximately 2% of the EU’s GDP. The country stands out on our GT20 list because real GDP growth is expected to pick up in 2025 and 2026 due to a recovery in external demand and exports, easing financial conditions, and resilient private consumption. Romania is the largest producer of electronics in CEE, with electric machinery and equipment significantly contributing to annual output and exports. Key industries such as auto assembly, textiles, and footwear further bolster its economic profile. Romania's promising outlook, favorable tax system, and opportunities to optimize supply chains and logistics have led to an upward trend in FDI.

In the Middle East, the United Arab Emirates (UAE) has the third-largest economy and is one of the wealthiest countries in the region on a per capita basis. While approximately 30% of its GDP is derived from oil and gas output, which contributes nearly 13% to the country’s total exports, the UAE is making efforts to diversify its growth. The "We the UAE 2031" initiative, unveiled in 2022, aims to create opportunities for FDI and sustainable growth through societal, economic, diplomatic, and ecosystem collaboration. Driven by a surge in investment inflows, the non-oil sector is projected to grow by 4.7% in 2024 and continue expanding until 2030, solidifying the UAE's position as a pivotal GT20 country.

We have already started beefing up our capabilities across our GT20. In the Middle East, for example, we’re investing more than €500 million  in the region between 2024 and 2030.

At this point, you might be saying: It doesn’t take a rocket scientist to identify fast-growing economies. And that it’s obvious we’ll grow faster on their tailwinds. And you’d be right, on the one hand. But on the other hand, we need to be in a position to take advantage of the opportunities. We need to have the strategy, capacity, and infrastructure to catch these winds of change and add the most value for our customers. That’s what our GT20 growth initiative is all about.

For customers, our GT20 initiative means a more comprehensive understanding of their needs in these markets – and along the trade lanes to and from them. And the enhanced services and improved infrastructure necessary to deliver on those needs. That also means capitalizing our expertise in express shipping, global forwarding, and supply chain management to meet the increasingly diverse requirements of many industries, such as the life sciences & healthcare sector, where supply chains are transforming rapidly.

As the world’s most international company, we’re well-positioned to leverage today’s geographic tailwinds – the confluence of China+X strategies, supply chain diversification, and strategic investment flows that are fundamentally reshaping the global economic landscape. With our GT20 initiative, we’re ensuring we raise our sails in all the right places to accelerate our growth and that of our customers.