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Yesterday, Dubai Multi Commodities Center unveiled the latest special editions of the 2021 Future of Trade Report, entitled “Challenging Expectations and Accelerating Economic Recovery from the Pandemic”.
The report expects global trade activity to recover in 2021 after showing remarkable resilience in 2020 despite the challenging economic woes associated with the Covid 19 pandemic, according to the Dubai government’s media statement on its website.
The report released yesterday looks at two key findings at the regional and global levels. First, the expectation that world trade will help accelerate global economic growth in 2021 and beyond, amid expectations that the US and Chinese economies will lead this growth.
This contrasts with World Trade Organization estimates of a double-digit annual decline in trade activity (13% to 32%).
Secondly, Dubai, which is one of the main shopping centers, recorded significant growth in foreign trade in 2020, despite the economic problems caused by the Covid 19 pandemic; In the second half of 2020, trade volumes rose sharply by 6% over the same period last year. The value of Dubai’s total exports in 2020 increased by 8% over the same period last year.
Ahmed bin Sulayem, CEO and CEO of DMCC, said: “The outlook for global trade in 2020 has been bleak in light of the world’s concern over the fight against the Covid 19 pandemic and its aftermath.
The picture looks more positive today, as evidenced by the results of the latest special edition of the 2021 Future of Trade Report.
Despite the astounding flexibility that global trade has, it is at the same time undergoing a number of broad changes. In the coming years, we are expected to witness new features of global trade in the light of the impact of digital technologies, different consumer behavior and the trend towards combating climate change, as well as the impact of geopolitical factors.
Our new report offers some specific recommendations for governments and companies looking to adapt to this new landscape and accelerate recovery from the pandemic. ”
The report included several findings, as it showed that technology was the most contributing factor in transforming expectations in global trade; Blockchain, decentralized finance and other new and innovative technologies will accelerate the growth of trade.
For example, large sums of money are invested in decentralized financial procedures. Since the beginning of 2021 alone, the total value of investments in decentralized finance has tripled, from $ 20 billion to $ 60 billion. The continuous growth of digital infrastructure is accelerating a notable transformation of trade activities from a national to a global level.
Supporting global growth
Ferial Ahmadi, Chief Operating Officer of DMCC, said: “The evidence presented in the Future of Trade Report 2021 points to a positive outlook for global trade after a period of difficulty and uncertainty.
World trade has exceeded all expectations and continues to support global economic growth. The geopolitical landscape continues to challenge and influence the global trading system, but continued reliance on technology will shape new characteristics for future trade.
A notable feature of the past 12 months has been the focus on sustainable international trading practices by governments, companies and investors, which is now a top priority on the business agenda. The report also highlights a key finding that is consistent with our previous findings, namely the importance of international coordination and cooperation and technology as key drivers of recovery. ”
On a geopolitical level, concerns about protectionist policies persist in light of ongoing trade tensions between the United States and China, rising economic nationalism, and increasing imbalances between low- and middle-income countries.
In addition, an important development took place in the area of sustainability and global trade; The EU’s efforts to use “carbon pricing” practices under the Carbon Calibration Mechanism (CBAM) have been criticized as a form of protectionism, which in turn will exacerbate existing geopolitical tensions.
The results of the Future of Trade report show that the emergence of a “new era of protectionism” poses significant risks, especially in the aftermath of the Covid 19 pandemic and the growing debate over the US-China divide, but protectionist measures will remain an option as they are costly and unpredictable and have a negative impact. in the workplace. On the other hand, the emergence of so-called economic nationalism is quite likely.
There were fears that the COVID-19 pandemic would return resilience to the very bottom of the political and institutional agenda, but this did not happen.
Indeed, China, Japan, the United States, South Korea and Canada are among the countries that have announced more ambitious targets for carbon neutrality. Companies and investors have also worked to revitalize sustainability efforts, which are expected to expand in the coming years.
On the other hand, the implementation of the Carbon Emissions Calibration Mechanism (CBAM) has major implications for international trade and will raise questions about how to accurately measure emissions in complex supply chains. Technology and artificial intelligence can be part of the solution for companies and governments looking to accurately assess sustainability as part of their business programs.
Key Recommendations for Governments and Businesses
• To further accelerate sustainable trade, governments should diversify their global trade relations to promote economic transformation and strong job growth, while addressing youth unemployment and underemployment during the recovery period. Businesses and governments also need to be flexible and continue to innovate to withstand ongoing market fluctuations and seize the unique opportunities created by the Covid 19 pandemic.
• Companies should invest more in the digital technologies of the future to lower costs and improve integration across sectors. Companies should step up their research and development to implement sustainable practices, some of which will be based on new technologies.
• With growing protectionism, companies should take advantage of free trade zones and use them strategically when it comes to entering into commercial trade contracts. Governments should use all the macroeconomic and financial instruments at their disposal to develop mutually beneficial trade relations rather than resorting to tariffs.
• Since protectionist measures can be misinterpreted, CBAM is unlikely to be implemented in a flexible manner, so governments should create a practical and politically acceptable mechanism, and cooperation between countries should be promoted on a broader scale.
Strengthening the corporate governance, social and environmental responsibility of governments and companies to assess cross-border investment and trade flows in equity, bond and foreign exchange markets is one of the most important methods.
During the presentation of the report, a group of experts on world trade joined the discussion on the report: Khadija Haq, Head of Research and Chief Economist, Emirates NBD; Roberta Bermartini, Head of Trade Cost Analysis, World Trade Organization; Yanislav Malakhov, expert in crypto and blockchain technologies, founder of Aeternity; and Markus Treacher, CEO of CB Investment Growth Holdings.
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