Technology advancements could bridge the current $1.5 trillion trade finance gap, with potential to inject new growth in trade, according to a report on ‘The Future of Trade’ from DMCC.
The research highlights the emerging impact of digital transformation for importers and exporters, and the world’s top ten commodity trading hubs, along with the ongoing shifts in global economic power.
It noted Blockchain is likely to redefine the trade sector over the next decade, providing faster, more secure and effective ways to handle workflows and move goods across borders, but that large scale progress is still to be made.
Estimates indicate that Blockchain could increase global GDP by nearly 5 percent and trade volumes by 15 percent.
The report states that 50 percent of SME funding applications are rejected by banks and that alternative trade finance, powered by FinTech and Blockchain, is on the rise. For example, the alternative finance market in the APAC region more than doubled between 2015 and 2016 to the total value of $245.2 billion.
Ahmed Bin Sulayem, Executive Chairman, DMCC, said, “Trade and trade finance will be revolutionised by Blockchain and other emerging technologies. The UAE and Dubai are advancing fast by looking well into the future to capitalise on these changes critical to retaining our position as the world’s number 1 commodities trade hub”.
In addition to the impact of emerging technologies, the report details how Geopolitical factors, including the current US administration and UK’s Brexit vote, challenge traditional tradeflows.
With a ten-year outlook, the report states that the world’s economic centre of gravity is shifting to Asia and that China’s Belt and Road initiative is gathering momentum. Furthermore, China’s increasing reliance on domestic consumption and move to technology-led manufacturing will see 100 million labour-intensive jobs shift to other low-cost countries. This will lead to accelerated manufacturing growth in for example Vietnam, Myanmar and Indonesia.
“Global trade and trade finance are at the cusp of a digital revolution,” said Gautam Sashittal, DMCC’s Chief Executive Officer. “Just as the shipping container revolutionised trade in the 1950s, sweeping advance in tech will reshape trade and how we move goods across borders. Our research helps us all understand how global trade will evolve, and how we can prepare, over the next decade.”