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Trade on the rebound after Covid, says DHL study – updated

[ December 3, 2020   //   ]

Trade and capital flows have already started to recover from the Covid crisis, according to the DHL Global Connectedness Index 2020, published on 3 December. DHL and co-authors, NYU Stern School of Business, say that the report is the first comprehensive assessment of globalization during the spreading pandemic.

Lead author Steven Altman, senior research scholar and director of the DHL Initiative at Stern School said: “This report shows that globalisation did not collapse in 2020, but that the pandemic did transform – at least temporarily – how countries connect. It also demonstrates both the dangers of a world where critical linkages break down and the urgent need for more effective cooperation in the face of global challenges.”

While personal travel plummeted, trade, capital, and information flows held up surprisingly well. International trade has rebounded strongly after a sharp plunge at the onset of the pandemic and remains a vital backbone for economies worldwide.

Foreign direct investment (FDI) flows could though fall 30-40% this year, as also projected by the UN, but strong policy responses by governments and central banks have helped to stabilize markets. Digital information flows have meanwhile surged as people and companies rushed to stay connected digitally, driving double-digit increases in global internet traffic.

The Netherlands was again at the top of the ranking as the world’s most globally connected country with Singapore, Belgium, the UAE and Ireland in the top five. But no country boasts a more global distribution of flows than the UK. Europe claims the top spot as the world’s most globalized region, with 8 of the 10 most globally connected countries located there while North America is the top region for information and capital flows.

At a Q&A session, Altman added that Brexit could post the UK greater challenges than in the past. On the other hand, the breadth of its trading relationships meant that it had many opportunities in which to pursue growth.

The EU’s share of UK trade had remained fairly stable since the Brexit referendum, he said.

Economies that punch well above their weight in terms of international flows are led by Cambodia, Singapore, Viet Nam and Malaysia, with regional supply chains a key factor in the performance of Southeast Asian nations.

This year’s GCI report also marks the start of the new DHL Initiative on Globalization at New York University’s Stern School of Business. The new research initiative aims to create a centre of excellence for data-driven globalisation research – www.stern.nyu.edu/globalization.

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