What is the DHL Global Connectedness Index (GCI) and why does it matter to your business?
In the context of the ongoing global pandemic, your ability to understand, access and benefit from international markets may be essential to your organization’s survival and success. The GCI analyzes broad patterns in the cross-border movement of goods, information, capital and people, delivering insight about the status and potential of globalization. Your company can use this information to assess the strength and direction of markets worldwide.
The recently released GCI 2021 Update reveals some valuable and surprising conclusions, beginning with this bottom-line message:
The Covid-19 pandemic has confronted globalization with its greatest stress test in decades. Borders slammed shut, geopolitical tensions flared, and industries faced unprecedented shocks to both demand and supply. But more than a year and a half since the onset of the pandemic, data clearly refutes early speculation that Covid-19 would spell the end of globalization. The DHL Global Connectedness Index declined very modestly in 2020, and we see clear evidence of a recovery in 2021.
In fact, instead of dealing a long-term blow to globalization, the pandemic has revealed just how important international connections are for individuals, communities and businesses. The movement of goods, information and capital across borders is on the rise, bringing relief and vital products to people around the world. It is important to note, however, that the world’s poorest countries are still dangerously disconnected, and there is evidence that these countries are falling even further behind in the recovery.
Here are some additional takeaways from the GCI report:
Trade in Goods Shows Resilience
While it plummeted at the onset of the pandemic in 2020, international trade in goods surged back to above pre-pandemic levels over the course of only six months. In 2021, this strong growth continued, fueling a global economic recovery, even as supply chain challenges emerged and expanded.
International Capital Flows Are Rebounding Steadily
Government intervention and central bank action clearly helped prevent a global financial crisis, stabilizing international capital flows after significant declines at the beginning of the pandemic. In mid-2020, portfolio equity flows began to improve, and foreign direct investment (FDI) rebounded sharply in 2021.
Information Has Been Moving Strongly
Digital information kept the world connected and moving forward during the pandemic. Information flows were robust, and allowed for global collaboration in the fight against Covid-19. Researchers, pharmaceutical companies, and logistics experts were all able to work together across great distances to achieve the rapid development, production and distribution of vaccines.
Global Travel Is Still Limited
The pandemic hit international people flows the hardest, and they are on track to recover the slowest. International travel remained down more than 80% in the first half of 2021.
U.S.-China Trade Improves
Home to the world’s two largest economies, the U.S. and China saw a decrease in trade in 2019, with the ongoing trade disagreement taking center stage. In 2020, the pandemic reversed this trend, pushing trade higher as global flows increased.
Globalization, Not Regionalization, Is the Watchword
During the pandemic, long-distance trade has grown faster than short-distance trade. This fact suggests that, despite talk of growing regionalization, the movement of goods, information and capital has remained global in nature.
Based on the data, it is clear that globalization is an important force for economic and social recovery as we move through the ongoing pandemic.
Is your business seeing strong signs of global connectedness? Let us know on Twitter @DHLUS.