While global trade volumes are currently in the doldrums, a new report from HSBC forecasts a significant upturn on the horizon as the world enters a “third phase of globalization” that will boost trade, change the way companies work and improve the quality of life of millions of people.
Led by a burst of intra-Asian trade that will lift the region’s share of global exports to 27% by 2050 from 17% at present, the quadrupling of worldwide exports to an estimated US$68.5 trillion in the next 35 years will be driven by new digital technologies, improved communications and increasing economic integration, the report states.
“The importance of trade’s contribution to global growth and prosperity cannot be underestimated. Asia’s position at the leading edge of technological and supply chain innovation gives the region a unique opportunity to benefit from this next wave of globalization,” Paul Skelton, HSBC’s regional head of Commercial Banking, Asia Pacific, says.
Among the driving factors leading the new phase of globalization, plummeting transportation and logistics costs are first and foremost. Improved global connectivity and the lower cost of transportation and logistics “could lead to working with new partners in new countries,” the report suggests.
HSBC’s optimistic projection is included in a recently-released white paper produced by Oxford Economics for the global banking giant, titled Trade Winds: Shaping the Future of International Business, which reviews the history of the last 150 years of global trade while looking ahead to the midpoint of the 21st century.
The report highlights several other developments that will influence trade over the next four decades:
- There will be more multilateral efforts to counter climate change, which will lead to advances in fuel efficiency, renewable energy and energy storage.
- The development of 3D printing will gradually revolutionize the way customers access goods, enabling customized ‘build to order’ production.
- Trade flows will increasingly relate to the movement of services rather than products, in the same way that films, books and music are increasingly sent digitally.
- The rise of intelligent technology will mean devices will increasingly be able to interact with each other.
Traditional ways of conducting business will evolve over the next several decades, according to the paper, as companies adopt more flexible and agile operating models. “In the future, large multinational conglomerates will increasingly compete with smaller, more nimble networks of micro-multinationals that create their own specialized value chains.”
Companies will increasingly have to consider how to strategically position themselves to take advantage of these new business platforms, the paper concludes.