Ahmed Bin Sulayem, Executive Chairman and CEO, DMCC. Image Credit: Supplied

Dubai: Global trade, which hit a record high of $28.5 trillion in 2021 according to the UNCTAD, is expected to grow steadily in 2022 and the coming years as a new era of multilateralism – underpinned by regionalisation, trade in services, innovation and sustainable trade – counters the impact of the slowing global economy, a new report said on Tuesday.

While trade growth may be somewhat slower in 2022 compared to 2021, overall there is reason for optimism, notwithstanding issues such as the fallout from the war in Ukraine and from the pandemic, the DMCC said in its Future of Trade 2022 report titled ‘A New Era of Multilateralism’.

Pent-up demand from the COVID-19 shock is already driving trade in goods, and a rebound in trade in services is set to follow,” the report said.

According to the research, the new era of multilateralism will be shaped by three shifts in the global economy.

Firstly, there will be a natural migration towards lifting barriers as countries become increasingly sensitive to the costs of protectionism. Secondly, inflation will continue to climb, and central bank policy-tightening will become more pronounced to combat the rise in prices. This makes borrowing more expensive worldwide, lowering import demand and deteriorating export competitiveness. Finally, global trade will be impacted by the climate crisis in terms of both the economic shocks and opportunities it will bring.

Ahmed Bin Sulayem, Executive Chairman and CEO, DMCC, said: “After a record year for trade in 2021, we expect global trade growth to remain resilient in 2022, albeit with some slowdown in pace. Beyond the immediate support from a rebound in pent-up demand from the COVID-19 shock, there are also more long-term changes underway that should support cross-border trade in the years ahead – these include increased regionalism, strength in services trade, innovation, and climate politics.”

New era of multilateralism

Geopolitics will continue to shape the trade landscape in the 2020s, building on new developments in regionalism, bilateral trade, and global investment flows. Nationalist – as opposed to protectionist – trade policies are likely to continue to dominate, the report added.

In the UAE, the government is aiming to sign 27 bilateral Comprehensive Economic Partnership Agreements with key trading partners, including eight this year, as it looks to boost trade and foreign direct investment. Elsewhere, China and Taiwan’s stated bids to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, in addition to the United Kingdom’s ongoing accession process, offer opportunities for trade and bilateral investment.

Developments in virtual assets, including central bank digital currencies, stand to reshape global finance, trade, and investment. Innovative technologies continue to drive productivity gains, sustainable development, and growth accelerations around the globe. Trade and technology will continue to seek synergies in 2022 and beyond.