Global tensions and trade disruptions will have a limited negative effect on global economic growth, expected to experience losses at just below 1%, according to Economist Impact’s Trade in Transition report, commissioned by DP World.
The report surveyed 3,500 company executives about trade trends, technology adoption, supply chains, and geopolitical risks.
“Geopolitical shocks continue to disrupt global trade, driving the restructuring of supply chains to center stage. Trade block restructuring with increased trade barriers could decrease global GDP significantly,” the report stated.
Nearly a quarter of those surveyed have expressed that increased transport costs in 2024 will pose the biggest challenge for companies looking to increase their exports.
Similar concerns that the report highlighted include higher tariffs in key markets, supply shortages of production materials, uncertain foreign currencies, and political instability.
Despite the geopolitical and economic challenges, there are multiple growth drivers underpinning global trade, the report said.
Around 26% of the organizations surveyed globally are expanding into new markets, while 24% focus on existing markets to address increased demand.
More specifically, the report shows that 33% of companies aim to diversify their market reach in the Middle East region.
The report warns of “geoeconomic fragmentation” impacted by intensified trade barriers on high-tech goods.
An overall 0.9% GDP decline could occur between the US and China, with China’s economy expected to experience a 1.9% loss and the US to witness a 0.9% decline separately.
The report mentions that companies must balance cost and quality against security and resilience in supply chains due to trade fragmentation.
“These strategies aim to boost resilience but might raise costs for businesses juggling multiple supply chains. Achieving this balance is pivotal in navigating the changing global trade landscape,” it adds.
Additionally, the report states that should a 15% tariff be imposed on traded industrial goods, the global GDP will go down by 0.7%.
Now accepting applications for Fast Company Middle East’s Best Workplaces For Women 2023. Click here to register.
Loading the player...
How Omar Samra made uncharted territory his playground for impact