- Accelerated regionalisation to define trade, with the
emergence of new rival trade blocs and corridors as deglobalisation
takes hold
- 'Friendshoring' – the movement of operations to allies –
will strengthen inter-regional trading hubs in Asia and North
America
- Supply chain restructuring accelerated by rise of global
security, protectionism and climate concerns
- AI is driving a paradigm shift as real-world adoption scales
rapidly to seek out operational efficiencies and predictive
analytics
- Future of Trade survey of 150 business leaders found AI as
the most transformative technology for global trade
- UAE emerges in top 10 trade hubs for environmentally sound
technologies amid growing importance of sustainability
trade
- Report offers recommendations to businesses and governments
to drive trade resilience and growth despite uncertainty on
headwinds
- Full report can be accessed and downloaded here:
www.futureoftrade.com
DUBAI, UAE, May 21, 2024
/PRNewswire/ -- Global trade growth and resilience will be
maintained in 2024 as an accelerated shift to regionalisation
drives deeper bilateral and multilateral partnerships. This will be
underpinned by deep supply chain restructuring, modest and uneven
goods trade growth, a surge in digital services trade and
widespread AI adoption – finds DMCC's latest Future of Trade 2024
report titled "Decoupled and Reconfigured".
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Global trade is set to recover from 2023's minor contraction to
grow 2.6% in 2024. Services trade will be a core driver of trade
growth, in particular digitally delivered services which are
outpacing goods and other services trade growth, while the
widespread adoption of AI is primed to enhance supply-side
efficiencies and trade finance. However, the trade outlook will
face multiple headwinds stemming from geopolitical and
macroeconomic risks, such as economic slowdowns in China and Europe, persistent inflation and
higher-for-longer interest rates, and continued commodity price
volatility.
Dr. Hamad Buamim, Chairman of the Board, DMCC, said: "The
world is braced for a series of transformative changes as regional
trade ties deepen and novel technologies unlock efficiencies on a
level we have never seen before. DMCC's Future of Trade research
sees the strong trends that emerged from the Covid pandemic – such
as the widespread adoption of digital services and a shift away
from globalisation – accelerate and take hold for years to come. As
global trade decouples, regions such as Asia and the Middle
East will play an outsized role as new alliances form and
supply chains de-risk away from the once common globalisation
model. The implications of these shifts are profound, as trade
policies and conflicts redraw economic maps in real-time."
Feryal Ahmadi, Chief Operating
Officer, DMCC, said: "The world order is causing supply
shortages, rerouting cargo, and adding costs to consumers. Services
trade is where we expect a major surge given the new wave of
digital services flowing across the world. The opportunities of AI
on global trade are tangible today, both in supply chains and trade
finance, and the dawn of new advanced forms will only strengthen
its impact."
She added: "Businesses and economies are prioritising resilience
in the years ahead given the pressures they face today. This is
also creating new regional blocs and trade corridors that are
heavily indexing on technological prowess given the importance of
semiconductors and AI development to businesses around the world.
Trade hubs that get this piece right will find themselves at the
nexus of global trade flows for the coming decades. Within this
landscape, we will see the UAE and hubs like Dubai play an increasingly critical
role, not least in the sustainable technologies space as the world
races to decarbonise and the Middle
East leverages its competitive edge in the energy transition
and its role as a global trade facilitator."
Regionalisation will be driven by new alliances forged
from the pressures of geopolitics, climate and technology. This new
era of multilateralism will see the emergence of new trade blocs
and corridors. It is a marked departure from the drive to
globalisation of the last two decades as corporations prioritise
resilience over cost savings and efficiencies.
This trend will be heavily influenced by political events,
particularly the US election, which could trigger a new wave of
protectionist tariffs. Over the next few years, there will be an
increase in friendshoring – the movement of operations to allies,
aided by regional multilateral agreements - which will strengthen
inter-regional trading hubs in Asia and North
America. Fast-growing emerging markets that are pursuing
non-aligned strategies will benefit from increased trade in the
multipolar landscape.
Supply chain restructuring will accelerate as
companies look to de-risk their logistics networks against a global
rise in conflicts, economic nationalism and protectionism. This may
entail longer shipping routes and elevated costs but prioritises
resilience. Emerging markets like Mexico, Vietnam and India are positioning themselves as
alternative sources of production to China, in particular for manufacturing goods,
as companies shift supply chain segments to their markets.
Meanwhile, in the Middle East
countries like the UAE are capitalising on their relative political
neutrality, advanced trade infrastructure through hubs like
Dubai, and
geographical position between East and West and North and South to
carve out an increasingly prominent role as a trade facilitator in
this reconfigured trade landscape.
Climate change is accelerating this trend. Driven by
policy, shifting consumer consciousness and extreme weather events
impacting trade and production costs, governments and companies are
increasingly embracing net-zero commitments. Trade is emerging as a
key enabler in the pursuit of renewable energy sources and
sustainable technologies. Carbon-pricing regimes are evolving
across different jurisdictions and will force companies to
internalise the carbon cost of production, which will create new
trade opportunities for more sustainable suppliers and drive
forward a greener trade landscape. Meanwhile, the acquisition and
diffusion of environmentally sound technologies (ESTs) is growing
as more countries strive to decarbonise their industries. The UAE
has emerged in the top 10 importers of ESTs in the world by value,
alongside other major hubs such as the
United States, China,
the Netherlands, Hong Kong, and Singapore, showcasing its rising strategic and
regional importance as a global trade hub in the sustainability
transition.
AI is set to revolutionise trade. This will herald a
paradigm shift in the operating environment, as businesses use AI
to optimise supply chains, enhance efficiency and reduce costs
through predictive analytics. AI will bring data-driven market
insights to capture new business opportunities, and AI-powered
trade finance solutions will streamline transactions. The Future of
Trade survey of more than 150 trade leaders and policymakers found
that AI is the technology with the most transformative effect on
trade.
Beyond AI, semiconductors are poised to be the frontline
in the drive for technological supremacy. Beyond their
indispensable role in electronics, semiconductors are also integral
to the green transition as they are essential components in solar
panel cells and electric vehicles. The emerging 'chip war' between
China and the US will escalate
trade tensions and drive further regionalisation as both powers
ramp up production and shield their industries.
DMCC's Future of Trade 2024 report puts forward a series of key
recommendations to businesses and governments to accelerate growth
and counter any headwinds:
Policy recommendations for businesses:
- Reconfigure supply chains against geopolitical
shifts. Diversification of suppliers and investing in
alternative and additional sourcing strategies can also help
mitigate supply chain disruptions.
- Invest in digital transformation and
innovation. Companies that invest in understanding and
implementing AI stand to benefit from its revolutionary impact.
Those that do not run the risk of losing out to competition.
- Prioritise sustainability at the board
level. Businesses should elevate sustainability to the top
of the board agenda and integrate ESG frameworks into strategic
decision-making to ensure alignment with overall national
objectives.
- Mitigate climate-related supply chain
risks. Businesses should assess climate risks related to
key supply chain nodes and operations and implement risk mitigation
strategies such as securing property and casualty insurance
coverage.
- Engage with non-traditional finance sources. Businesses,
particularly SMEs, should explore non-traditional financing. This
includes venture capital, private equity, crowdfunding, and impact
investing. Larger businesses can collaborate with development banks
on blended finance initiatives and benefit from de-risked lending
and access to new markets.
Policy recommendations for governments:
- Build new trade relationships. Encouraging exports
to regions with strong growth potential can help build new consumer
bases, mitigate the impact of slow global trade growth and enhance
resilience against economic fluctuations.
- Invest in digital infrastructure and
innovation. Supporting the development of AI technologies
and digital trade platforms can unlock new opportunities for
economic growth and competitiveness.
- Foster AI adoption and regulation. By fostering
innovation and addressing concerns related to privacy, bias and
accountability, governments can unlock the transformative potential
of AI. This can be achieved through investing in AI research and
development, supporting AI education and workforce training
programmes and establishing regulatory frameworks to ensure ethical
AI deployment.
- Invest in sustainable infrastructure and
technology. Governments should prioritise renewable energy
projects, upgrade transportation networks and support research and
development of sustainable technologies.
- Prioritise all policy and non-policy measures to address the
trade finance gap. Governments should prioritise
collaborating with international financial institutions and
multilateral development banks to increase the availability of
trade finance instruments and implement regulatory reforms to
reduce barriers to trade finance.
Report launch
Ahmed Bin Sulayem,
DMCC's Executive Chairman and CEO, unveiled the report on Tuesday
at the Royal Society of Arts in London,
United Kingdom. During the launch event, DMCC's
representatives shared their views on the report alongside a panel
of international industry leaders and economists from Hitachi
ZeroCarbon, the Industrial and Commercial Bank of China (ICBC) and the European Center for
International Political Economy (ECIPE).
The Future of Trade is the flagship thought
leadership report series from DMCC on the changing nature of global
trade. The report examines the impact of global economic trends,
geopolitics, technology, sustainability and finance on the future
of the trade landscape. The report series has been viewed and
downloaded over 1.9 million times, underscoring DMCC's growing
recognition as a leading voice on international trade.
The report is a synthesis of expert opinions and detailed
research on the outlook for international trade. DMCC convened nine
global roundtables to seek insights from over 150 industry experts,
interviewed trade specialists, analysed survey data and developed
its commodity indices.
About DMCC
Headquartered in Dubai, DMCC is the world's most
interconnected Free Zone, and the leading trade and enterprise hub
for commodities. Whether developing vibrant neighbourhoods with
world-class property like Jumeirah Lakes Towers and the
much-anticipated Uptown Dubai, or delivering high performance
business services, DMCC provides everything its dynamic community
needs to live, work and thrive. Made for Trade, DMCC is proud to
sustain and grow Dubai's position as the place to be for
global trade today and long into the future. www.dmcc.ae
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SOURCE Dubai Multi Commodities Centre (DMCC)