Global exports will rise from US$17.4tn to US$29.7tn over the next decade, with this upward trajectory shaped by a push for more inclusive and sustainable trade practices.
The Future of Global Trade 2030, published 22 November, uses a proprietary model for export projections and data analysis developed with Price Waterhouse Coopers, alongside a survey of more than 500 C-suite and senior leaders in global companies. It uncovers the major trends that will define the future of trade, as well as pinpoints the markets across Asia, Africa and the Middle East that will drive export growth.
Changing centres of gravity
Trade dynamics are set to shift in the coming decade, with high‑growth economies and new corridors poised to gain, leading to a rebalancing of the global trade system – a view shared by 86% of the companies surveyed.
Asia, Africa and the Middle East will see a ramp up in investment flows, with 82% of respondents saying they are considering new production locations in these regions in the next five to 10 years, supporting the trend towards rebalancing to emerging markets.
With this rebalancing comes an unprecedented opportunity to make globalisation work for more markets and businesses, from SMEs to multinationals, and drive a more sustainable and inclusive model for global trade.
A trade rebound that benefits all players
Despite a backdrop of ongoing uncertainties, world trade has shown immense resilience, which is testament to its importance as a driver of economic growth. After recovering to pre-pandemic levels within the first quarter of 2021, the continued export growth projected by the research will open up new opportunities to distribute the benefits of globalisation to an ever-increasing number of participants.
However, this can only happen if entrepreneurs and SMEs are given the support they need – a view shared by the overwhelming majority (91%) of companies surveyed in the report, who agree that the multilateral trading system needs to be reset to become more equitable.
But as shortfalls in finance impede the full potential of trade to deliver growth, jobs and poverty reduction in the wake of Covid-19, overcoming the trade finance gap – which has now hit a record high of US$1.7tn according to the latest data from the Asian Development Bank (ADB) – must become a priority.
Encouragingly, four-fifths of survey respondents say they have incorporated partnerships with banks to promote access to finance for robust and inclusive supply chains as a key priority for their five-to-10-year internationalisation and cross-border expansion strategies.
Alongside this focus on financial inclusion, new channels for cross-border trade such as e-commerce offer an opportunity to break down barriers to entry for new participants, while fintech advances will improve the accessibility of global supply chains for SMEs – further cementing the contribution of trade to the United Nations’ 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs).
Boosting trade without harming the planet
The research also uncovered a significant trend towards the adoption of sustainable trade practices in response to climate concerns and a rising wave of conscious consumerism, with 89% of respondents acknowledging the need to incorporate them across their supply chains.
In the wake of Cop26, net zero has become a core principle for businesses, with just over one third of companies saying that they have set their sights on emissions reduction as a top priority within the next five to 10 years.
Other push factors that are gradually turning trade green include the development and enforcement of global standards and frameworks to measure and monitor adherence to sustainable and fair practices. Meanwhile, regulatory actions such as the European Union proposal to impose a carbon tax on imports are injecting a further sense of urgency.
“Sustainability and fair trade within supply chains will become increasingly important for organisations in the next decade,” says Kai Fehr, global head of trade and working capital at Standard Chartered. “We are working to be a leader by providing tools and solutions, such as the sustainable trade finance proposition, to support companies in integrating sustainability across their ecosystems.”
An acceleration of underlying trends
A further finding from the research was the extent to which the pandemic’s acceleration of underlying trends will continue to influence trade over the next decade. Digitalisation across the ecosystem is already leading to faster, more agile trade flows, and half of the companies surveyed say they are looking for more efficiency and transparency by accelerating the next wave of technology adoption.
Meanwhile, the move towards ‘just-in-case’ supply chain management is driving the adoption of robust and resilient growth initiatives that enable companies to shield against future trade disruptions. Almost three-quarters of companies say they are realigning their footprint to be closer to existing markets and customers, while just over half say that they are relocating entirely to better manage risk.
The shape of trade to come
As Standard Chartered’s research demonstrates, the future of global trade is moving rapidly towards a new, more sustainable and inclusive paradigm.
However, to address the new fundamentals of trade growth, multi-stakeholder collaboration is required among governments, businesses and society. Guided by a common purpose and enabled by technology, stakeholders need to take a unified approach to further accelerate equitable and fair global trade growth.
If this can be achieved, the next decade of trade has the potential to distribute the benefits of globalisation more evenly, uplifting both businesses and humanity alike.