There were some important findings and conclusions in the report of DMCC on the “Future of Trade”. Some of the facts are that technology adoption will continue to change global commerce and trade finance. A new era of protectionism has been highlighted as a major threat and despite the epidemic, sustainability remains at the top of governmental and business agendas. Carbon pricing is on the verge of becoming a major worldwide problem.
According to DMC’s latest special edition Future of Commerce 2021 study, ‘Defying expectations and driving the post-pandemic economic recovery,’ global trade will revive in 2021 after demonstrating unexpected resilience in 2020 despite the economic obstacles created by the pandemic.
Two major global and regional takeaways are highlighted in today’s report: To begin with, solid global economic development will be underpinned by global commerce in 2021 and beyond, with the US and Chinese economies leading the way. This increase has bucked forecasts of double-digit yearly decreases, which the World Trade Organisation predicted to be between 13 and 32 percent.
Second, despite the economic hurdles created by the COVID-19 epidemic, Dubai, a key commercial center, saw its international trade growth rebound considerably in 2020, with the second half of 2020 witnessing a particularly robust 6 percent year-on-year increase in trade volumes. On a yearly basis, Dubai’s overall export values increased by 8% in 2020. The forecast for global commerce in 2020, according to Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, was grim as the globe grappled with the consequences of the epidemic. As demonstrated by the conclusions of the newest Special Edition Future of Trade – 2021 study, the outlook is significantly more favorable today.
However, while global commerce has shown to be resilient, it is also undergoing significant change. Technology, shifting consumer habits, the fight against climate change, and geopolitics will all play a role in its transformation in the coming years. Against this backdrop, our study offers a set of practical suggestions to governments and companies looking to negotiate this new terrain and speed up the pandemic recovery.
In order for people to find an alternative source of income during the pandemic since the stimulus packages were not enough to help them, the engagement in the financial industries was drastically increased, such as CFD, Forex, or crypto. All those were also possible due to technological advancements. Every industry was in different stages in different countries, for example, forex trading in the US, CFD trading in UAE, and crypto trading in Europe. The financial branches appeared to be ready to satisfy the needs of their users.
Technology, according to the study, is the most transformational aspect of the global trade picture. Blockchain, decentralized financing (DeFi), and other disruptive technologies will help trade develop even faster. DeFi protocols, for example, have received a significant amount of funding. The entire money locked into DeFi has quadrupled from USD 20 billion to USD 60 billion since the beginning of 2021. Digital infrastructures will continue to speed a game-changing shift in commerce from national to global levels as they develop.
The information given in the Future of Trade study shows a hopeful outlook following a difficult and uncertain time. Global commerce has outperformed forecasts and will continue to support global economic development. While geopolitics will continue to provide problems and have an influence on the global trading system, technological adoption will continue to define trade’s future.
The turn of governments, corporations, and investors toward sustainable solutions in international commerce – currently high on the agenda – has also been a significant development during the previous twelve months. In accordance with our past results, the research concludes that international cooperation, as well as technology, remain the major facilitators and drivers of the recovery.
On the geopolitical front, worries of protectionism persist, fueled by persistent trade disputes between the United States and China, increasing economic nationalism, and widening economic disparities between low- and middle-income countries. Furthermore, in a significant development for global trade and sustainable development, the EU’s push to implement a carbon pricing practice through the expected Carbon Border Adjustment, or “Carbon Pricing,” has been criticized as a form of protectionist policies, with the potential to exacerbate existing tensions in the region.
While a ‘new age of protectionism is a significant danger in the aftermath of the pandemic and increased discussions about US-China separation, the findings imply that outright interventionism will be avoided since it is expensive, unexpected, and has a negative impact on jobs. Economic nationalism, on the other hand, is more likely to emerge. While some feared that the epidemic would push sustainability to the bottom of the political and business priority list, this has not been the case. Instead, China, Japan, the United States, South Korea, and Canada have all declared more ambitious net-zero objectives.
Furthermore, businesses and investors have increased their sustainable practices, which are expected to rise dramatically in the next few years. CBAM, on the other hand, has the potential to wreak havoc on international commerce and raises issues about how to correctly quantify emissions from complicated supply chains.
Once again, technology and artificial intelligence may provide at least a portion of the solution for businesses and governments looking to perform accurate sustainability evaluations as part of their trade agendas.
The Future of Trade study makes a number of important suggestions to businesses and governments, including:
- In order to combat young underemployment throughout the recovery, authorities must diversify their global trade connections in order to stimulate structural development for job-intensive growth. To handle continued market turbulence and capitalize on new possibilities created by the epidemic, businesses and governments must stay nimble and inventive.
- Businesses should invest more in future mobile technology to cut costs and create cross-sector synergies. Firms should prioritize innovation in order to adopt sustainability methods, some of which will make use of new technology.
- Organizations should take benefit of and establish smart use of free trade zones when negotiating commercial trading agreements in the face of growing protectionism. To prevent reverting to tariffs, governments must make full use of macroeconomics tools to foster mutually advantageous trading agreements.
- CBAM implementation is unlikely to be straightforward due to the risk of protectionist misunderstanding, thus governments must come up with a more practical and politically acceptable approach. Broader cross-national coordination is needed. One way is to enhance ESG standards across governments and corporations when analyzing border trade and technology flows, as well as equity, bond, and foreign exchange markets.