As 2021 draws to a close, the state of globalisation is far stronger than many expected, despite predictions to the contrary as a transport capacity squeeze and port congestion resulted in severe supply chain disruptions.
That’s one of the findings of the DHL Global Connectedness Index 2021, which takes a comprehensive, data-driven look at the events of 2020-21.
While the spread of Covid initially saw trade in goods plummeting at a record pace – with only the digital flow of information surging as in-person interactions switched to on-screen interfaces – overall the report has found that globalisation is recovering from the initial shock.
Trade in goods bounced back quickly in mid-2020 and even surpassed pre-pandemic levels by the end of the year. By early 2021, global trade volumes had set new records. “Trade in services, other than travel and transportation, has been resilient, and forecasts call for trade growth (both goods and services) to outpace GDP in 2021 and 2022.
“Only people flows have been slow to recover, but we see glimmers of hope as international travel begins to pick up again.”
Sourcing patterns have meanwhile revealed that globalisation has remained resilient through the pandemic.
“If a robust shift toward regionalisation were under way, we would expect trade, on average, to take place over shorter distances,” the report points out. “However, data suggests the opposite: trade distances have increased since 2004, albeit more slowly since 2012. Beyond trade flows, the data on our remaining globalisation pillars - capital, information, and people - also fails to indicate a clear trend toward regionalisation.”
An important take-away from the pandemic, the report points out, is the vulnerabilities that it has highlighted –supply chain bottlenecks and low-income countries lagging behind in the recovery. “We can learn from this “stress test” to fortify and expand the benefits of a connected world.”