“This growth will be accelerated by the adoption of new technology and digitisation of working practices forced by the onset of the Covid-19 pandemic — which, combined with a shift in attitudes to online interactions, is likely to further fuel growth of cross-border trade in services in the coming five years,” says the report. This is a notable change in the global trade landscape — trade in services has historically been eclipsed by trade in goods. Yet according to the report, services accounted for 55% of all global trade flows with a value of US$13.7 trillion of cross-border transactions in 2019. The value of global trade in services grew by 50% across the past decade — double the pace of growth of global trade in merchandise — despite still consisting 24% of all global trade.
The dominant narrative today is that the era of free trade is dead. If slowing growth in trade since the Global Financial Crisis represented the beginning of the end, the protectionist policies of US President Donald Trump must surely be the nail in the coffin. And now, Covid-19 has triggered the steepest drop in global trade since 2000, with trade falling 12.5% in 2Q2020 according to the CPB Netherlands Bureau for Economic Policy Analysis.
A new report from money wire firm Western Union, however, tells a different story. Despite the doom and gloom surrounding trade overall, growth in services is booming. According to the report, conducted with Oxford Economics, the value of international trade in services is expected to rise by almost a third, from US$6.1 trillion ($8.3 trillion) currently to US$8 trillion by 2025.
