Global commerce is undergoing rapid transformation. Traditional supply chains have been disrupted by geopolitical tensions and technological advancements that continue to reshape international trade.
To stay afloat in a dynamic trade environment, businesses have to align with evolving trends. Those trends are redefining global trade. One, there is a steep rise in trade in services. Traditionally—and for decades—the movement of physical goods has dominated international trade.
However, the landscape is shifting. The value of trade in services is steadily increasing and projected to claim a significant portion of all new international trade activities soon. This growth is particularly evident in digital and financial services.
Advancements in software development, cloud computing-cum-data analytics and digitally delivered services have overturned the old trade order by equipping businesses with secure, less costly and more efficient online capabilities.
Meanwhile, cross-border financial transactions are becoming commonplace courtesy of fintechs and online banking. With better regulatory harmonisation and smoother flow of financial services across borders financial services can only increase.
Two, the post-Covid-19 era has exposed the fragility of long and geographically dispersed supply chains. Today, many companies prefer reshoring/near-shoring, friend-shoring and accentuated supply chain visibility.
Reshoring and near-shoring bring production closer home, the former entailing domiciling factories within a country’s borders while the latter involving setting up production lines in neighbouring jurisdictions to curb disruptions caused by geographical instability or distance. Meanwhile, technological advancements like blockchain are enabling real-time tracking of goods thereby providing greater transparency and control.
Three, the paper-heavy world of international trade is undergoing a sweeping digital revolution through adoption of tools that streamline processes, reduce costs and enhance transparency. Fintech solutions are facilitating faster and more secure payments within international trade networks.
Meanwhile, AI is enabling faster and more accurate trade data analysis, optimising logistics and helping in identifying potential disruptions in the supply chain.
Four, geopolitical tensions between major powers have sent bleak shockwaves right through trade flow spectrums. Rise in protectionist policies continues to create trade barriers while disrupting established trade patterns. Businesses need to stay informed about evolving trade policies to navigate some of these challenges. As international cooperation arrangements get mired in unprecedented complexities, regional trade agreements between smaller groups of countries are likely to gain traction.
Five, environmental, social and governance (ESG) considerations are becoming crucial factors in international trade. Consumers, investors and governments are demanding greater transparency and accountability in sustainable production practices, environmental impacts and social responsibility.
The writer Cabinet Secretary for Investments, Trade and Industry
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