BrazilWhiteshield launches the Global Trade Resilience Index
Whiteshield, a public policy and strategy advisory, has launched the inaugural edition of its Global Trade Resilience Index 2023, shedding light on which economies are the most resilient to external trade shocks such as geopolitical disputes, trade bottlenecks, wars, and pandemics.
Launched on the sidelines of COP28, the Global Trade Resilience Index gauges how effective countries are in absorbing trade shocks in the short term and recovering in the medium term. The index is based on a comprehensive dataset comprising 58 indicators, and covers just under 140 economies.
According to Fadi Farra, Senior Managing Partner at Whiteshield, the firm pioneered the index in response to the growing need of country leaders and government bodies to understand how trade and complementary policies, as well as black swan events, impact trade flows and economic development.
“The index presents a novel approach to supporting countries in identifying areas to improve both their absorptive and recovery capacities to trade shocks,” Farra said.
For leaders in Germany and the Netherlands, the launch of the Global Trade Resilience Index was received with jubilation.
Germany, the world’s third largest exporter, tops the index based on its strong trade networks and highly diversified trade both in terms of products and trade partners. Neighbouring the Netherlands, the world’s sixth-largest trading nation, ranks second due to its strong links to Europe and the rest of the world, advanced logistics and distribution systems, and its business-friendly environment.
The globe’s largest economy, the United States, holds third place in the ranking, with France, Japan, the United Kingdom, Italy, Singapore, China, and Belgium rounding off the top ten.
Notably, despite being the world’s top exporting country, China ranked only 9th on Whiteshield’s index. Farra said this was due to the country’s relative weaknesses in the institutional pillar. China was noted however for its strong capacity to absorb shocks (China plays a major role in the global supply chains with a diversified portfolio of goods and trading partners).
Middle East
From a Middle East perspective, the United Arab Emirates is considered the most resilient trade economy, at 31st overall, owing to its role as a major global trading hub, business-friendly environment, highly diversified trade partners, infrastructure, and high-quality logistics and customs capacity.
Qatar is the 2nd top performer among Arab countries and 46th globally, with Saudi Arabia hot on its heels. According to Whiteshield, the Kingdom reaps the benefits from accelerated economic diversification plans and supporting policies.
“Institutional, financial and regulatory reforms 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,” Farra explained.
Areas for improvement include facilitation of border measures and stronger law protection,” he continued.
Bahrain and Jordan sit just above Sri Lanka and Pakistan, while Lebanon hovers in 88th place in between Kazakhstan, Senegal, and Azerbaijan. Kuwait, Egypt and Oman rank within the 50th and 70th spots.
Ranking at the bottom of the index are many African countries, including the likes of Comoros, Lesotho, Gambia, Burkina Faso, and Zimbabwe.
Commenting on the report, Raed Safadi, Chief Economist at Whiteshield, said: “The Global Trade Resilience Index is published at a time when severe disruptions to global markets have undermined trade resilience. While approaches to near 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.”
“We developed the index 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.”
Understanding the Global Trade Resilience Index
With offices in London, Astana, Vancouver, and three in the Middle East (Dubai, Abu Dhabi, Riyadh), Whiteshield is an award-winning consulting firm specialised in strategic advisory and public policy.
The firm’s Global Trade Resilience Index is a comprehensive and holistic measure that captures a country’s level of trade resilience. The index sheds light on the overall capacity of a country to withstand and recover from trade shocks. It rests on two dimensions: 1) Absorptive Capacity, and 2) Recovery Capacity.
The Index is built on a rich dataset – the collection of 58 indicators, 16 of which are estimated based on the trade data and 42 are from international public sources, going beyond conventional measures of economic diversification and integration. The methodology incorporates innovative methods rooted in the network theory and embeds simulations of trade shocks and trace their potential impact on trade flows.
