In spite of the economic obstacles provided by the pandemic, global trade will revive in 2021, according to DMCC’s newest special edition Future of Trade 2021 research titled, “Defying expectations and driving the post-pandemic economic recovery”.
Today’s study focuses on two major global and regional findings: The United States and China’s economies will continue to be the driving forces behind global commerce in 2021 and beyond. The World Trade Organization had predicted yearly decreases of between 13 and 32 percent, but this rise has defied their predictions.
For the second time this year, despite the COVID-19 pandemic’s economic issues, Dubai’s international trade growth rebounded considerably in 2020, with the second half of 2020 showing a particularly high gain in trade volumes, of 6% year-on year. Over the course of a year, the value of Dubai’s entire exports increased by 8 percent.
One of the DMCC’s executive chairman and CEOs Ahmed Bin Sulayem indicated that commerce was expected to be severely affected by the Ebola outbreak in 2020. According to the most recent Special Edition Future of Trade – 2021 research, things are looking up. In spite of the endurance of global commerce, it is now undergoing a dramatic transformation. In the next years, it will be shaped by a variety of factors, including technological advancements, shifting consumer habits, and efforts to battle climate change.
Technology And Global Trade
The greatest disruptive factor in the global trade picture is technology, according to the report. Further commerce development will be accelerated by the use of blockchain, decentralized financing (DeFi), and other innovative and disruptive technologies. There has been a lot of money poured on DeFi protocols, for example. There has been a threefold increase in DeFi’s overall worth only since the beginning of the year 2021. Digital infrastructures are accelerating the change from national to global commerce, and this will continue to develop.
For Feryal Ahmadi, the CEO of the Dubai Multi-National Corporation (DMCC), the data are given in the Future of Trade study supports a positive future after a hard and uncertain time. In the midst of geopolitical uncertainty, like it’s shown here, technological adoption will continue to define trade’s long-term prospects. In the past year, governments, businesses, and investors have all shifted their focus to sustainable practices in international commerce, which is currently at the top of the agenda. A fundamental result of the paper is that the recovery will be aided by international coordination and cooperation, as well as technological advances.
Geopolitical tensions between the United States and China, the rise of economic nationalism, and the expanding economic imbalance between lower and middle-income countries continue to stoke worries of protectionism. Because of its high cost, unpredictability, and negative effect on employment, a “new era of protectionism” is a real possibility in light of this outbreak and growing concerns about a possible decoupling between the United States and China. Economic nationalism, on the other hand, is more likely to take hold.
Companies and investors, on the other hand, have stepped up their efforts to be more environmentally friendly, and this trend is expected to continue in the coming years. On the other hand, CBAM raises problems about how to reliably estimate emissions from complicated supply chains, which might have a large impact on international commerce. Again, technology and artificial intelligence may be able to help firms and governments make correct evaluations of sustainability in their trade objectives, at least partially.
Recommendations For Governments And Businesses
As a result of its findings, the Future of Trade study makes the following recommendations to industry and government:
In order to combat young unemployment and underemployment throughout the recovery, governments must diversify their global trade partnerships in order to support economic transformation for job-intensive development. Businesses and governments alike must stay adaptable and imaginative in order to handle the current market turbulence and explore new possibilities that have surfaced as a result of the epidemic
When it comes to establishing commercial trading contracts, corporations should strategically use free trade zones in light of increased protectionism. To avoid resorting to tariffs, governments must guarantee that macroeconomic and financial measures are used to the fullest extent possible.
Governments must devise a more practical and politically acceptable method to replace CBAM, whose implementation is unlikely to be easy due to the risk of protectionist misunderstanding. A broader cross-country effort is needed. Among the ways governments and businesses may improve their ESG policies is by examining cross-border investment and trade flows, in stocks, bonds, and foreign currency.
Nominal Trade And Its Development
WTO’s newest data on goods trade in nominal US dollar terms are provided with the trade projection. The WTO’s web database has these and other data available for download.
Compared to other commodities categories, June’s dip in automobile product trade is notably substantial. Automotive semiconductor shortages, which have interrupted global vehicle manufacturing, may be to blame for this fall in sales of automobiles. Integrated circuits, on the other hand, show no sign of decrease. Limited supplies for automotive applications were likely due to the pandemic, which diverted the supply of integrated circuits to other purposes (e.g. consumer electronics).
The World Trade Organization’s second-quarter commercial services trade data will not be released until later this month. In the first quarter, services trade was down 9% year-on-year, mainly due to the sustained decline in Travel, which was down 62%. There was a 6 percent increase in the area of Other services, which covers banking and other business services. Service exports are expected to show a positive annual growth rate of 0.5 percent in the second quarter, but this should not be seen as a complete recovery.
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