Study Reveals Business Leaders’ Astonishing Optimism for Global Trade in 2024

Business leaders around the world continue to show astonishing optimism about the trajectory of global trade in 2024, despite the challenges witnessed in 2023 and escalating geopolitical tensions, according to a new study conducted by “Economist Impact”, the trade arm of the Economist Group, and “DP World”, a global ports group, which was unveiled at the World Economic Forum.

The main motivation behind this optimism lies in the increasing belief that technology will bring about a significant transformation in the efficiency and flexibility of supply chains.

Amid rising concerns about protectionism, globalization, and political instability, companies are reassessing the risks in their supply chains and shifting towards geographically proximate strategies, relying on “friendly” manufacturing and consumption centers and adopting dual supply chains.

Results of the fourth report: 

In anticipation of escalating challenges, companies are planning to increase their reliance on technology. A third of the participants in the study will focus on advanced automation, while 28% will concentrate on blockchain technology.

Additionally, 21% will prioritize artificial intelligence, big data analytics, and predictive analysis.

Adapting to Supply Chains: More companies, as geopolitical tensions cast shadows over the business landscape, are shifting towards geographically closer strategies between manufacturing and consumption “friendly” centers and dual supply chains.

More than a quarter of participants are leaning towards choosing fewer suppliers.

“Economist Impact expects a 0.9% decrease in global gross domestic product if tariffs on high-tech goods increase significantly.”

The fourth report, titled “Trade in a Transitional Phase,” compiled by the trade division of the Economist Group annually on behalf of Dubai World Ports Group, includes perspectives from trade experts and senior executives from various regions and sectors.

This period of unprecedented transformation, increasing geopolitical risks, and urgent concerns about the impact of climate change and advancements in technology pose complex challenges for companies, but also open up promising opportunities.

The year 2023 witnessed a significant advancement in supply chain innovations, with technology driving an optimistic outlook for the year 2024.

A global survey of 3,500 business executives found that technologies aimed at improving the efficiency and flexibility of supply chains are the main source of optimism for business leaders when asked to assess the future of global trade.

At the heart of this sentiment lies the widespread adoption of artificial intelligence, with 98% of executives using AI technologies to bring about radical change in at least one area of their supply chain management operations.

Starting from finding solutions to inventory management problems, through reducing trading expenses, to improving transportation routes, executives benefit from integrating artificial intelligence into their operations.

One-third of the surveyed companies use AI techniques to achieve cost reductions in overall business operations and enhance resource planning and supply chains.

More than one-third of companies see enhancing the use of digital tools to improve inventory management as the most effective strategy in reducing overall trading and supply chain costs.

Companies are expected to increase their technological adoption to a greater extent this year, which is a proactive approach that reaffirms their commitment to using innovation to deal with a changing business landscape by improving efficiency and flexibility.

A third of the survey respondents will focus on advanced automation and robots to enhance logistical efficiency, while 28% of them will turn to blockchain technology to strengthen tracking capabilities and data security.

Additionally, 21% of them will rely on artificial intelligence, big data analytics, and predictive analytics to gain real-time insights and forecast disruptions in trade movements.

Supply chains adapt to variables, while geopolitical tensions cast a shadow over the business landscape.

The increasing geopolitical risks in a new era of globalization are shaping the landscape of global trade, as companies try to minimize risks in their supply chains. More than a third of companies are using geographic proximity strategies from “friendly” centers to shape their trade movement and supply chain operations, while 32% of companies are establishing parallel supply chains or dual sourcing.

In addition, over a quarter of the companies chose fewer suppliers, with an increase of 16 percentage points compared to the previous year, as the companies consider the advantages of consolidation versus diversification and control versus flexibility.

The fears are growing that political instability, increasing trade disputes, and global fragmentation will hinder growth. Officials in five companies participating in the study express concern about rising tariffs or uncertainty about tariffs in their main export or import markets.

In this context, 22% of executives highlighted the challenge posed by political instability in their source markets, while almost a quarter (23%) expressed concerns about increasing geopolitical uncertainty.

“Economist Impact” conducted a quantitative trade analysis through the “Global Trade Analysis Project” (GTAP) platform to estimate the potential decrease in global output from hypothetical scenarios of further “geo-economic fragmentation”.

In a scenario focused on significantly increasing trade barriers on high-tech goods, which is a pivotal point in the current geopolitical climate, “Economist Impact” projected a 0.9% decrease in global GDP.

Sultan Ahmed Bin Sulayem, Chairman and CEO of DP World, expressed optimism despite the challenges companies face in a rapidly changing environment.

He emphasized that governments can enhance economic benefits and maximize them by providing companies with the necessary forecasting capabilities and minimizing trade disputes.

To achieve this, he suggested reducing tariffs and collaborating with the private sector to expand the use of technological innovations, particularly in digitalization, automation, and artificial intelligence, which would increase efficiency, clarity, and adaptability.

John Ferguson, the global president of New Globalization in “Economist Impact,” added, “In 2024, we observed a clear increase in the diversity of approaches adopted by companies in their supply chains, amidst growing geopolitical risks and the increasing impact of climate change phenomena.

This reflects a growing understanding that there is no singular strategy capable of meeting the needs of different companies. It is already evident that technology is being used across supply chains to ensure companies’ ability to adapt faster and smarter.”