“All-time high levels of connectedness”: Global trade recovers from Covid-19 crisis

Global trade in goods has “surged” to above pre-pandemic levels, providing a “lifeline” for countries across the world.

That’s according to the 2021 DHL Global Connectedness Index, a new report published by DHL and the NYU Stern School of Business analysing globalisation across trade, capital, information, and people flows.

Comprising more than 3.5 million data points, the report found that international trade in goods is up 5 per cent on last year, with more goods traded across borders than ever before.

The growth has meant globalisation is projected to rise to a potential record high during 2021 following a small decline last year.


Image: DHL Global Connectedness Index 2021


DHL Express’ CEO John Pearson commented: “Many feared that the global crisis would jeopardise the progress of globalisation. We have been analysing the various international flows worldwide for years and after 1.5 years of the pandemic, we can now safely assure: the pandemic has not caused globalisation to collapse.

“After initial dips in 2020, the DHL Global Connectedness Index is already on the rise again this year.

“Trade has provided a lifeline for countries around the world, and DHL Express has played a key role in areas ranging from vaccine distribution to e-commerce.”

The surge of international trade since mid-2020 “far surpassed initial forecasts”, DHL and NYU Stern said, even as the mix of goods traded changed more than usual.

“The resilience of global flows is good news, because a connected world offers the best prospects for a strong and sustainable recovery from the Covid-19 pandemic,” added NYU Stern’s senior research scholar and director of the DHL Initiative on Globalisation Steven A. Altman.

“When a crisis strikes, many of us naturally feel a strong impulse to hunker down behind closed borders. But the more extreme the challenge, the more urgent it becomes to draw upon the best ideas and resources from at home and abroad.”

Supply chain disruptions due to the Covid-19 pandemic caused a spike in the interest among companies in producing goods closer to their destination markets, DHL and NYU Stern wrote in the report.

However, contrary to predictions that regionalisation would continue to rise, globalisation has not given way to regional trade. In reality, trade in goods took place over longer distances, on average, in 2020, the report found.

Speaking at the report launch, Pearson referenced the “extremely complicated” nature of altering supply chain set ups as a reason for this trend.

Altman added: “Looking at the economic fundamentals, companies chose to locate operations in a particular place for a particular reason, whether it was for quality or cost, and these things tend not to change that quickly.”

Despite the overall growth in trade, the report revealed the world’s poorest nations are still “dangerously disconnected” to the wider world and are trading less than they did in 2019. Foreign direct investment into low-income countries also fell over the same period.

The report also shows that, while globalisation is at a record high, it is still limited, “with large untapped opportunities available for countries and companies”, the companies wrote in a press release.


ImageL: DHL Global Connectedness Index 2021

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