- DMCC stated that, the recovery is definitely on the cards and will be reliant on immunization programmes as well as flexing geopolitical pressures.
- As per the statement stated by the Dubai’s Multi Commodities Centre, the globalized trade is all set to have a better resilient future within the Pandemic turmoil than the anticipated as it is poised to rebound robustly during this year in 2021, although the recovery will be a bit uneven as well as heavily reliant upon immunization and vaccine roll outs as well as flexing up the geopolitical pressures.
The Chief Operating Officer, Feryal Ahmadi, who supervises over the firms operating in accordance with the trade of the commodities that also encompasses of pulses to diamonds, stated out that; he had worried out that the global trade would crash out by 13 to 32 percent the preceding year, “did not materialise.”
Ms Ahmadi also stated out that; “It’s estimated that global trade and goods dropped by just 5.3 per cent during 2020 and was supported in part by the unprecedented policy measures implemented by governments to shore up their economies, so we’re actually seeing a much brighter picture than predicted. This is the start of the global economic recovery underpinned by trade growth, which is very positive.”
The Chief of trade cost analysis at the WTO, Roberta Piermartini, in a panel discussion hosted by the DMCC, stated out that; “a comparison with the trade data seen after the global financial crisis demonstrates the resilience of the global economy during the pandemic. At that time, trade collapsed by about 10 per cent against a fall in [gross domestic product] of just 0.6 percent. What we observe now is a fall in GDP of 3.5 per cent – the biggest fall since the Second World War – and a much lower reduction on trade.”
She also further added out that; “the global economy has learnt from “what happened in the global financial crisis”. The reaction in terms of fiscal stimulus has been fast and co-ordinated, but it has also been much more extensive – reaching an average of about 15 percent of GDP, which is impressive.”
As per the DMCC’s The Future of Trade Report, however, everything is not looking gold as the future of the globalized trade recovery and robust economic recovery is reliant on the global vaccine initiative and governments’ capacity to retort swiftly to latest waves and variations of Covid-19.
Also core to the viewpoint is the rapport between the US and China, anticipated to be the principal drivers of global economic progress this year, and the adoption of new technologies in ports and the distribution industry to facilitate the intensification of e-commerce.
Ms Ahmadi stated out that Dubai is an illustration of a destination where trade resisted negative predictions with volumes soaring 6 percent in the second half of 2020. The emirate’s global export values soared 8 percent in 2020, on an annual basis.
While a robust echo was also recorded in the US, UK and China, Ms Ahmadi held prospects in developing nations are frailer against the background of latest waves of coronavirus.
Inadequate production and spreading of vaccines could be the foremost to local progress discrepancies, with the spread of vaccine-resistant strains of COVID-19 potentially plummeting global GDP by 1 percent and eliminating up to 2 percent from global goods trade growth this year, the DMCC stated.
“Of course, there are still uncertainties for international trade ahead,” said Ms Ahmadi.
“The future of trade growth will depend largely on a successful and evenly distributed roll out of Covid-19 vaccines, as well as maximising supply chain efficiencies.”
Observing ahead, while global trade has shown its bounciness, it is instantaneously in the midst of profound transformation, stated that Ahmed Bin Sulayem, executive chairman and chief executive of the DMCC.
“Technology, changing consumer behaviours, the drive to combat climate change, and geopolitics will all be key contributors to its reshaping in the years ahead,” he stated.
Although tensions in the US-China trading relationship are not new, the extent to which the two nations can decouple their investment and trade relationship is still an area of concern, the DMCC stated.
While a “new age of protectionism” is a crucial risk, outright trade barriers will be kept at bay because it is costly, unpredictable, and affects jobs, the trade zone stated, with economic independence more likely to occur.
To counter rising protectionism, the DMCC urges businesses to take advantage of free trade zones for marketable trading agreements, while managements should adopt macroeconomic and financial tools to promote mutually advantageous trading relationships to avoid falling back on tariffs.
“International policy co-ordination to boost trade for the more vulnerable economies is critical,” said Ms Ahmadi. “This is a topic that should be the focus of international forums, such as the G7 summit taking place in the UK.”
Another vital motivation for the future of global trade is sustainability, with China, Japan, the US, South Korea and Canada among nations to have divulged more aggressive net zero carbon emissions targets.
At the G7 Summit in Cornwall this week, UK Prime Minister Boris Johnson will impulse members to obligate to a new deal to help evolving nations decarbonize their economies as he overviews to power ambitious global action on climate transformation.
While global exertions to ramp up climate alteration pledges are on track, the DMCC stated out that the global energy evolution away from fossil fuels necessitates investment in new technology and closer co-ordination with the private sector.
Technology can also have a “game-changing impact” on trade movements by realizing competences across supply chains after the pandemic lifted the acceleration towards e-commerce in the retail sector.
Mainstream productions are now distinguishing the ground breaking potential of blockchain, the DMCC stated, to boost effectiveness and diminish expenses with blockchain, decentralized finance (DeFi) and other disruptive technologies set to further fast-track trade growth.
“Since the start of 2021 alone, the total value locked into DeFi has tripled from approximately $20bn to $60bn,” said DMCC.
“As digital infrastructures grow, they will continue to accelerate a ground-breaking shift in trade from the national to the global.”
The flexibility of global trade during the pandemic was partially due to high mandate for medical merchandize and private protective equipment, stated Ms Piermartini.
Khatija Haque, head of research and chief economist at Emirates NBD, stated out that the fiscal response from administrations and the fact that individuals sustained to be paid while they were stuck at home working or on furlough during lockdowns also helped to defend the trade industry.
With clients in advanced economies construction up record levels of excess savings, they procured electronics, furniture and toys to entertain themselves.
“This is one of the reasons we saw such a sharp turnaround in the volume of global trade from the fourth quarter of last year, and particularly into Q1 2021,” said Ms Haque.
This will also stimulate a much swifter recovery for 2021 than the WTO anticipation, she said. “The volume of global trade in the first quarter of this year was up around 7 per cent, relative to the first quarter of last year, and that is only going to be even bigger when you go into Q2 because you’re coming off a very low base,” Ms Haque stated.