- Global trade has bounced back after the pandemic – it was 10% higher than pre-pandemic levels in May 2022.
- The inaugural DHL Trade Growth Atlas pulls together forecasts from the IMF and millions of data points to chart the prospects of global trade.
- Here are three charts showing the surprising resilience of trade by volume in the face of shocks, and how the centre of global trade gravity is shifting.
The COVID-19 pandemic did not spell the end of globalization. That’s the view of the inaugural DHL Trade Growth Atlas, which draws on more than a million data points on the flow of goods between countries to map the state of world trade, says an article published in World Economic Forum.
Global trade in goods by volume has returned to growth amid continued disruption to supply chains caused by the pandemic and the war in Ukraine, and was 10% higher than pre-pandemic levels in May 2022.
The DHL report notes that COVID-19 sparked the “steepest decline in international trade on record – followed by the fastest recovery”.
CEO of Deutsche Post DHL Group, Frank Appel, sounds a note of optimism in the report, which he says shows global trade remains resilient in the face of global shocks.
“Open trade and countries that work together will remain crucial drivers of prosperity in the future – as they have been for centuries. Trade will continue to build bridges that strengthen us as a global community,” says Appel.
“However, decision makers might reconsider certain supply chains, based on reasonable tradeoffs between cost and risk, so that they are not just efficient, but also secure. Multi-sourcing of suppliers, or using multiple trade lanes and modes of transport, can be reasonable steps to prepare for single source disruptions.”
Here are two other charts from the DHL Trade Growth Atlas, that show the state of global trade in 2022 and its prospects for the future.
The outlook for global trade
In 2022 and 2023, international trade will slow, due to the war in Ukraine. But it is predicted the war will have a much smaller impact globally on trade than the pandemic – slowing but not reversing growth, so it still grows faster in those two years than the entire previous decade.
By 2027, DHL projects trade to sustain or even expand its role in the global economy, growing slightly faster than GDP year on year.
The below chart tracks the IMF’s changing forecasts on the growth of global trade in both goods and services, with the yellow dotted line showing the latest, July, forecast.
How the trade map is being redrawn
“The centre of gravity of world trade is poised for a turn to the south,” says the report, which finds Southeast and South Asia, as well as Sub-Saharan Africa will all be central to trade growth in future.
The below chart, which again draws on IMF forecasts, shows these three regions will have the fastest growing global trade growth by volume in the next five years.
By contrast, the rate of China’s trade growth will slow, and its share of global growth will fall, as trade growth spreads across more countries.
By 2026, emerging economies will account for 45% of trade growth, with 55% in advanced economies.
The report concludes that global trade can be a powerful force against inflation and supply chain disruptions: “With inflation at multi-decade highs and economies slowing down, trade’s power to accelerate growth, lower prices and diversify sources of key inputs is even more crucial for companies and countries than it was before the present wave of crises.”
Deutsche Post DHL is a partner of the World Economic Forum’s Trade and Investment Platform, which seeks to ensure open and stable commerce, facilitate flows of goods, services and investment, support sustainable and equitable value chains and grow cross-border businesses.
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Source: World Economic Forum