In an era marked by geopolitical tensions and recent conflicts, global connectedness has demonstrated remarkable resilience and growth over the past two years. The 2024 Global Connectedness Report reveals that disruptions caused by the COVID-19 pandemic are now behind us, with its economic after-effects waning.
Globalisation achieved record heights in 2022 and continued its upward trajectory in 2023, revealing an increasingly interconnected world economy. This growth contradicts the notion that regionalisation is on the rise. Singapore has emerged as the most globally connected country, highlighting the power of regional integration and free trade agreements (FTAs). As a member of the Association of Southeast Asian Nations (ASEAN) and a signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Singapore’s standing underscores the importance of these agreements.
In contrast, other CPTPP member nations like Canada and Australia lag in global connectedness, ranking 29th and 33rd, respectively. Large economies such as these often focus more on their sizeable domestic markets than international trade. For example, Canada’s trade relationship with the USA accounts for 54% of its combined trade, capital, information, and people flows. Meanwhile, Australia’s remote location poses challenges for connectivity, although the UK market remains competitive due to shared language, culture, and legal systems, along with a recent FTA.
The UK’s extensive network of FTAs has reduced barriers to international trade, showcasing its diversified connections. As the UK prepares to join the CPTPP, businesses are encouraged to explore these FTAs, especially in a post-Brexit landscape. However, North America shows a nearshoring trend, with Mexico playing a key role. While 85% of Mexico’s exports go to the USA and Canada, only 46% of its imports come from these countries, indicating Mexico’s broad global connections.
Despite this nearshoring trend in North America, it remains a significant market for UK exporters outside Europe, with trade flows spanning long distances. The increasing global trade connectivity offers substantial opportunities for businesses worldwide. With trade growth expected to accelerate in 2024, businesses should reconsider their international market strategies.
E-commerce has become vital for international trade. While most sales occur within national borders, cross-border e-commerce is growing rapidly. Companies involved in this area are seeing a strong share of international sales, reaching 28% in 2023. Juniper Research forecasts a 16% annual growth rate for cross-border e-commerce from 2023 to 2028, compared to 8% for domestic sales.
By entering new markets, e-commerce businesses can tap into a global customer base, beyond regional constraints. Leveraging FTAs and specialised guidance from partners, businesses can scale operations, diversify revenue streams, and mitigate risks, creating both immediate and long-term growth opportunities.
With global connectedness at an all-time high, businesses are presented with unprecedented opportunities for international expansion. By rethinking market strategies and leveraging trade agreements, companies can navigate this new era of globalisation successfully.