Despite the rising protectionism and the shock of the coronavirus (COVID-19) pandemic, globalisation is proving to endure. However, our world is entering a new era of globalisation, with paths forward encompassing supply chain shifts, digital connectivity and sustainability. Identifying evolving trends and learning how they will transform the global manufacturing, trade and financial landscape will help business mitigate risks and secure better access to supplies and markets globally.
International trade and foreign direct investment growth have slowed down since the 2010s, on the back of shifting global demand, rising labour costs, technological advances and other factors such as protectionism policy and changing consumer value. Global travel and migration have also been severely disrupted since the COVID-19 pandemic. Digital connectivity, meanwhile, becomes an important driver of global economic integration.
The global economy is entering a new phase of globalisation, as business efforts to reshuffle supply chains, digitalise and enhance sustainability are reshaping the global manufacturing, trade and investment landscape. The future globalisation will become more people-centred and less geographically-concentrated, as more countries would join the global value chains. Nevertheless, geopolitical risks and protectionism continue to pose a threat to global trade and investment.
Economies with large internal markets, e-commerce, education services, high-tech companies and local brands are likely the winners of the new globalisation. Meanwhile, small and open economies may come under stress. Consumers may face higher product prices due to manufacturers’ production relocation. The income gap between consumers in advanced and developing countries may also rise, creating a more fragmented global consumer market.
In order to mitigate risks and better secure access to supplies and markets in the new global era, companies will need to accelerate digital transformation, focus on people and the planet and diversify both their end-markets and the supply of raw materials, labour and manufacturing across the value chains.
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