According to the latest "Future of Trade" reports, a new era of global trade led by multilateralism and sustainable trade

The Dubai Multi Commodities Center revealed the results of its latest report, "The Future of Trade 2022", which predicted that global trade, which recorded a record $28.5 trillion in 2021,[1] would continue its steady growth during 2022 and the coming years, coinciding with entering a new era of Multilateralism, centered on regional orientation, services trade, innovation and sustainable trade, counters the slowing impact of the global economy.

While global trade is expected to grow at a slower pace during 2022 compared to the previous year, the optimistic outlook still exists despite the issues that are at the forefront of the global scene today, such as the repercussions of the war in Ukraine and the outbreak of the epidemic.

Trade in goods is currently experiencing growth led by pent-up demand caused by the shock after the outbreak of the pandemic, and a recovery in services trade is expected to follow.

On this occasion, Ahmed bin Sulayem, CEO and CEO of DMCC, said: “We expect global trade to maintain its resilient growth this year, albeit at a somewhat slower pace than 2021, during which it achieved record results. In addition to the recovery taking place In the pent-up demand caused by the post-pandemic shock, many of the current long-term changes will support cross-border trade in the coming years, which include growing regionalism, strength in services trade, innovation, and climate policies.There are common efforts we must make for the future of trade and building "More resilient economies to crises, which is closing the financing gap in infrastructure and trade financing, and it is important that we do this in a more environmentally sustainable way. Closing the digital divide between countries and sectors will have a positive impact on global trade for all parties."

A new era of multilateralism

The landscape of trade growth has always been determined by geopolitical factors and will continue into the 2020s, based on new developments in regional trends, bilateral trade, and global investment flows.

Trade nationalism, as opposed to protectionism, is likely to continue to dominate the world trade landscape.

The old forms of multilateralism are expected to fade away and be replaced by a new type of multilateralism.

New trends, such as growing regionalism, will drive the wave of cross-border trade in new sectors, including in digitalization and sustainability.

With the growth of bilateral, regional and multilateral trade deals, the UAE government aims to sign 27 comprehensive bilateral economic partnership agreements with major trading partners, eight of them this year, in support of its efforts to boost trade and foreign direct investment.

Both China and Taiwan have applied to join the Comprehensive and Advanced Agreement for the Trans-Pacific Partnership, while the process of the United Kingdom's accession to the agreement is underway, enhancing bilateral trade and investment opportunities.

Under the new business model, cross-border investments and trade will focus on exploring new markets rather than seeking efficiencies.

There will be a critical juncture between trade liberalization and digital transformation, and the need to build compatible and interconnected networks between countries will become clear.

Advances in virtual assets, including central bank digital currencies, will reshape finance, trade and investment globally.

Innovative technologies continue to drive productivity gains, sustainable development and growth worldwide, with the critical importance of achieving synergies and synergies between technology and trade during 2022 and beyond.

Faryal Ahmadi, Chief Operating Officer of DMCC, said: “Strong global trade will help countries build resilience, sustainability and economic growth through 2022 and beyond by providing them with goods and services. Restructuring global value chains is a continuous source of liberalization trade and stimulate a recovery in global growth and cross-border trade, by facilitating economic diversification, allowing countries to reduce dependence on limited sources of importers, exporters and sectors.

The Future of Trade 2022 report makes several key recommendations for governments and businesses:

Corporate Trade Policy Recommendations

- Increased exchange of information through communications (including through both traditional and new technologies).

This helps prepare for and properly manage unexpected shocks (including geopolitical tensions and natural disasters).

Simplifying and digitizing business processes.

Faster and increasingly automated customs procedures and processes must be adopted to offset the continued increase in trade costs.

- Expansion and diversification of credit between companies.

This contributes to mitigating the effects of the risks.

Firms and financial intermediaries must coordinate with each other to address exposure to risk within supply chains through enhanced inter-company credit.

- Focusing strategically on economic diversification in cooperation with governments in order to support resilience and sustainable initiatives in the face of shocks caused by changing oil prices and climate-related uncertainties during production.

Policy recommendations to governments

Continue to prioritize closing trade finance gaps, including through export credit agencies, expanding working capital programs, and new facilities to support SME exporters.

Promotion and promotion of trade as a top priority.

Trade relations with less momentum should be given priority because the increase in bilateral trade flows, often leads to a decline in bilateral trade flows with other countries.

Bank loans guaranteed by the government should be used to purchase trade receivables and pump cash into supply chains.

In addition, these secured loans can be converted into financial bonds and financed through the central bank.

- Improved logistical performance.

Reducing trade costs by increasing the efficiency of customs transactions and border clearance, improving the quality of trade and transport infrastructure, and facilitating shipments at competitive rates.

Three basic transformations

The report showed that the contours of the new era of multilateralism will be shaped by three fundamental transformations in the global economy.

First, countries will naturally move to raise trade barriers as they want to reduce protectionism because of their costs, which is what happened when the pandemic froze global trade.

Second, inflation will continue to rise and central banks will become more stringent in their policies to combat price increases.

This makes borrowing more expensive worldwide, leading to lower import demand and deteriorating export competitiveness.

Third, global trade will be affected by the climate crisis, both in terms of economic shocks and the opportunities it will bring.

While government intervention may be needed to reduce potential economic losses, we should see an increase in demand for sustainable goods within both developed and developing economies, creating new opportunities for sustainable trade.

Report launch

The Multi Commodities Center unveiled the report during an event it organized at the Asia House Center in London, in the presence of experts in the field of global trade who participated in a panel discussion on the findings of the report.

Speakers included Pascal Lamy, former Director-General of the World Trade Organization, and panelists from Standard Chartered, Oliver Wyman, Hitachi and Bernud Ricard.

DMCC releases its flagship 'Futures of Trade' report every two years, which explores the changing nature of global trade.

The report assesses the impact of global geopolitics, technology, and economic trends on the future of trade, with a focus on trade growth, supply chains, trade finance, infrastructure, and sustainability.

The report examines scenarios for the evolution of trade in the 1920s and is suitable for any reader involved in trade and trade policy, international investment, and doing business with global value chains.

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