Whiteshield’s Global Trade Resilience Index (GTRI 2023), was launched on December 7 on the sidelines of COP28. The inaugural event saw government officials, influential figures from international and regional bodies, academics, and leading private sector voices gather.
Whiteshield said it has developed a “unique methodology” to gauge countries’ capacity to absorb trade shocks in the short term and recover in the medium term, with the aim of assisting countries in achieving their sustainable development objectives by identifying areas for improvement across our 58 GTRI indicators, covering 136 economies.
The top 10 GTRI performers include nine high-income countries (Germany 1st, Netherlands 2nd, USA 3rd, France 4th, Japan 5th, UK 6th, Italy 7th, Singapore 8th, Belgium 10th) and only one upper-middle-income (China 9th). Other upper-middle-income countries that ranked high include Malaysia (20th) and Thailand (22nd).
Germany, the world’s third largest exporter, tops the GTRI rankings on account of the strong trade networks and highly diversified trade both in terms of products and trade partners.
The Netherlands, meanwhile, is the world’s sixth-largest trading nation and ranks second in the GTRI due to its strong links to Europe and the rest of the world, advanced logistics and distribution systems, and its “business-friendly environment.”
The third top performer in the GTRI is the United States, the second-largest trading nation in the world.
According to Whitefield, the US’s high rank reflects, among others, the strengths of its global trade network, its role as a major global trading hub, and the diversified and complex goods it trades in.
China, despite. being the world’s top exporting country ranked only 9th. This, is said, was due to a strong capacity to absorb shocks (China plays a major role in the global supply chains with a diversified portfolio of goods and trading partners) but relative weaknesses in its institutional pillar.
The United Arab Emirates (UAE) is the top performer among Arab countries and 31st globally owing to its role as a major global trading hub, its business-friendly environment, highly diversified trade partners, infrastructure, and high quality logistics and customs capacity.
Areas for improvement include enhancing product diversification and moving up the value chain to trade in complex products.
The Kingdom of Saudi Arabia is the 3rd top performer among Arab countries and 47th globally.
Institutional, financial and regulatory reforms, it said, have resulted in major improvements in the business environment and high growth rates in travel, tourism, logistics and fintech sectors.
The Kingdom has managed to expand its trading partners beyond its traditional markets; however, while its trade diversification in goods is improving, it has yet to fully reach its full potential.
Areas for improvement include the facilitation of border measures and stronger law protection.
Fadi Farra, Senior Managing Partner at Whiteshield, said: “In light of the growing discussions around global trade policy issues and their role in supporting the greening of our economies, Whiteshield has pioneered the Global Trade Resilience Index 2023 which presents a novel approach to support countries in identifying areas to improve both their absorptive and recovery capacities to trade shocks. Our goal is to contribute to the success of COP28 and in particular where trade and complementary policies can help drive both climate and sustainable development actions.
Raed Safadi, Whiteshield’s Chief Economist, said: “The GTRI is published at a time when severe disruptions to global markets have undermined trade resilience. While approaches to “near shoring” or “friend shoring” can increase resilience to geo-political risks in the short term, they make countries less resilient to other types of shocks such as the recent COVID-19 pandemic. Whiteshield has developed the GTRI to support countries in enhancing their trade integration while minimising the impact of shocks on their economies. The report is a tool that helps to unlock trade resilience by incorporating innovative methods rooted in the network theory, embedding simulations of trade shocks and tracing their potential impact on trade flows.”