Saudi commerce minister speaks of shift in trade focus at World Economic Forum 

Jeddah - Yasmine El Tohamy - RIYADH: Business leaders are optimistic about trade movements in 2024 despite last year’s challenges and ongoing geopolitical tensions, according to a new research.

The fourth annual Trade in Transition study, unveiled on Jan. 16 on the sidelines of the World Economic Forum, forecasted that this period of unprecedented transformation — including heightened geopolitical risks, the urgent realities of climate change and significant advancements in technologies — was causing businesses to face complex challenges “yet there are also opportunities.”

The report, commissioned by DP World and led by Economist Impact, set out numerous projections based around further geoeconomic fragmentation, including that increased trade barriers on high-tech goods could cause a 0.9 percent decline in the global gross domestic product.

It surveyed 3,500 company executives around the world about trade trends, technology adoption, supply chains operations and geopolitical risks. 

Sultan Ahmed bin Sulayem, DP World Group chairman and CEO, said: “The findings in this report reveal a remarkable optimism, despite businesses having to operate in an increasingly uncertain environment.”

He highlighted that governments could maximize the significant economic benefits of trade “by providing the predictability that businesses need, while reducing trade friction.”

The executive added: “This entails not only tariff reduction, but also collaborating with the private sector to roll-out technological advancements — most notably in digitalization, automation and AI — that enable greater efficiency, visibility and adaptability”.

Businesses are expected to further boost their technological implementation this year in a bid to deploy innovation to navigate the evolving business landscape with increased efficiency and resilience.

John Ferguson, head of Economist Impact’s globalization, trade and finance practice, said: “In 2024, amid heightened geopolitical risk and the rising impact of climate change, there is an observable increase in the variability of approaches businesses are taking to their supply chains”.

“This reflects a growing understanding that no single strategy will meet the needs of different businesses. What’s clear is that technology is being implemented across supply chains to ensure business can adapt faster and smarter.”

More than a third of companies are using “friendshoring” –  when businesses restructure supply chains away from geopolitical rivals – to shape trade and logistics operations, while 32 percent are creating parallel delivery networks or dual sourcing.

Also, more than a quarter are opting for fewer suppliers as businesses weigh the advantages of consolidation against diversification and control against resilience.

Concerns over political instability, rising trade friction and global fragmentation to impede growth are also increasing. A fifth of businesses are concerned about higher tariffs or uncertainties around duties in key markets.