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- Business Forecast 2024: Tech-Driven Optimism Meets Growing Geopolitical Challenges
DAVOS, Switzerland, Jan. 16, 2024 /PRNewswire/ -- Despite the challenges of 2023 and rising geopolitical tensions, business leaders remain surprisingly optimistic for 2024, according to new research from Economist Impact and DP World, released today at the World Economic Forum.
The main driver is the growing belief that technology will transform the efficiency and resilience of supply chains. Amid growing concerns about protectionism, global fragmentation and political instability, companies are reassessing the risks within their supply chains and pivoting toward friendshoring and dual supply chain strategies.
The fourth annual study on trade in transition, commissioned by DP World and led by Economist Impact, captured the perspectives of trade experts and senior executives from a range of regions and sectors. This period of unprecedented transformation – heightened geopolitical risk, the urgent realities of climate change, and significant advances in technologies – is causing businesses to confront complex challenges. However, there are also opportunities.
2023 was a pivotal year for supply chain innovation as technology drives optimism for 2024
The global survey of 3,500 business executives found that technologies that improve supply chain efficiency and resilience are the top source of optimism for business leaders when asked to assess the future of global trade. At the heart of this sentiment is the widespread adoption of AI: 98% of executives are already using it to revolutionize at least one aspect of their supply chain operations.
From solving inventory management problems and reducing business expenses to optimizing transportation routes, executives are taking advantage of AI integration. A third of companies are using AI to reduce overall costs of business operations and the same number to improve resource and supply chain planning. More than a third of companies believe that driving the use of digital tools to improve inventory management is the most effective strategy for reducing overall trade and supply chain costs.
Businesses hope to further increase their technology adoption this year, a proactive approach that underscores a commitment to deploying innovation to navigate the changing business landscape with greater efficiency and resilience. Of those surveyed, a third will focus on advanced automation and robotics for logistics efficiency; 28% will turn to blockchain to improve data traceability and security; and 21% will adopt artificial intelligence, big data analytics and predictive analytics for real-time insights and disruption forecasting.
Supply chains adapt as geopolitical tensions weigh
In the new era of globalization, a landscape of heightened geopolitical risk is shaping the contours of global trade as companies seek to reduce risks in their supply chains. More than a third of companies are using friendshoring to shape business and supply chain operations, while 32% are creating parallel or dual-sourcing supply chains.
Additionally, more than a quarter are opting for fewer suppliers (up 16 percentage points from a year ago) as companies weigh the benefits of consolidation versus diversification and control versus resilience.
Concerns are growing that political instability, growing trade friction and global fragmentation could hamper growth. A fifth of companies are worried about higher tariffs, or uncertainties around tariffs, in key markets to which they export or import. In fact, 22% of executives emphasized the challenge of political instability in their sourcing markets, while nearly a quarter (23%) are concerned about increased geopolitical uncertainty.
Economist Impact conducted quantitative trade analysis through the Global Trade Analysis Project (GTAP) platform to estimate potential global output loss from hypothetical scenarios of increased “geoeconomic fragmentation.” In a scenario focused on a significant increase in trade barriers on high-tech products – a focal point in the current geopolitical climate – Economist Impact projected a 0.9% drop in global GDP.
Speaking today at the launch of the report at the World Economic Forum in Davos, DP World Group Chairman and CEO Sultan Ahmed bin Sulayem said:
"The findings of this report reveal notable optimism, even as businesses have to operate in an increasingly uncertain environment. Governments can maximize the significant economic benefits of trade by providing the predictability businesses need, while reducing trade friction. This implies not only the reduction of tariffs, but also collaborating with the private sector to implement technological advances, especially in digitalization, automation and artificial intelligence, which allow greater efficiency, visibility and adaptability."
John Ferguson, global leader, New Globalization, Economist Impact, added:
"2024, amid heightened geopolitical risk and the growing impact of climate change, will see an increase in variability in the approaches companies are taking in their supply chains. This reflects a growing understanding that no "A single strategy will meet the needs of different businesses. What is clear is that technology is being deployed across supply chains to ensure businesses can adapt faster and smarter."
To view the full report, click here.
About Economist Impact
Economist Impact combines the rigor of a think tank with the creativity of a media brand to engage an influential global audience.
We partner with corporations, foundations, NGOs and governments on big issues including sustainability, health and the changing shape of globalization to catalyze change and enable progress.
impact.economist.com
About Trade in Transition
This is the fourth edition of the Trade in Transition report commissioned by DP World and led by Economist Impact. It is a global survey that retrieves data from more than 3,500 executives and examines private sector sentiment on international trade and supply chains. More specifically, it looks at how factors such as geopolitics, climate change, and technology impact trade and supply chains. Trade in Transition also analyzes regional (North America, South America, Europe, Middle East, Africa and Asia-Pacific) and sectoral data (FMCG, industrials, consumer goods, food and beverages, energy and natural resources, health and pharmacy, and logistics and distribution) to compare and contrast priorities in international trade.
economistimpact.com/trade-in-transition/
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About DP World
Trade is the lifeblood of the global economy, creating opportunities and improving the quality of life for people around the world. DP World exists to improve the flow of global trade, changing what is possible for the customers and communities we serve globally.
With a dedicated, diverse and professional team of more than 103,000 employees spanning 75 countries on six continents, DP World is driving trade further and faster towards a seamless, future-ready supply chain.
We are rapidly transforming and integrating our businesses (ports and terminals, maritime services, logistics and technology) and uniting our global infrastructure with local expertise to create stronger and more efficient end-to-end supply chain solutions that can change the way the world does business.
What's more, we are reshaping the future by investing in innovation. From smart delivery systems to automated warehouse stacking, we are at the forefront of disruptive technology, driving the industry towards better ways of doing business, minimizing disruption from the factory to the customer's door.
WE MAKE THE BUSINESS FLOW CHANGE WHAT IS POSSIBLE FOR EVERYONE.
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