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|UK fourth in global digital race according to new report|
|Thursday, 22 December 2016|
The UK is one of the most ‘digital-ready’ economies in the world, ranking fourth out of 135 countries surveyed thanks to its ability to capitalise on digital business opportunities despite the uncertain global trade outlook, according to global trade credit insurer Euler Hermes.
European countries took the top five spots in the new Euler Hermes Enabling Digitalisation Index, which places the UK just behind Germany (1st), Netherlands (2nd) and Sweden (3rd), but ahead of Switzerland (5th) and global technology heavyweights Singapore (6th), the US (10th) and Japan (15th).
The digital world-ready findings are published in a report from Euler Hermes, Trade Wars: The Force Weakens, which explores global trends in international trade. According to the report, digitalisation now accounts for 9.4 per cent of annual global economic growth, of which 3.6 per cent is due exclusively to cross-border flow of data. By 2020, digitalisation will account for 16.6 per cent of global economic output with 7.4 per cent attributed to cross-border activity.
The rapid growth in trade in digital services contrasts sharply with anaemic overall growth in world trade and a marked decline in the trade of traditional manufactured goods and services, the report finds. Global trade growth has been weak in 2016 and will continue to be so in 2017, growing by a moderate +2..1 per cent year-on-year in 2016 before modestly ticking up to +3.1 per cent in 2017.
Growth in the volume of world trade is expected to stay below +4 per cent annually for the foreseeable future, well below the pre-global financial crisis average of +7 per cent. Nearly USD3,129bn of globally exchanged goods and services has disappeared since 2014; this loss of global trade is the close to the entire GDP of Germany, the report finds.
There are three reasons behind this. First, structural shifts in global demand as the US and China have retreated for good, and (non-tradeable) services have grown faster than before in most countries. Second, financial fragmentation makes trade and debt financing (in USD) very complicated and competitive devaluation have failed. Finally, private sector activity has been hindered by rising political risks and growing protectionism measures.
Valerio Perinelli, chief executive Euler Hermes UK and Ireland, said: “Data is the new commodity and can be a strong driver for growth. The Enabling Digitalisation Index recognises UK has many advantages including a thriving digital economy, trade and transport-related infrastructure and the general ease of doing business in Britain.”
He added: “However, even for these thriving new digital industries face the issues of growing protectionism, global uncertainty and the perennial risks of overdue or non-payment of services especially if they are exporting on open credit terms. Careful due diligence on those with whom you are trading to reduce the risk of payment default is essential.”
The Euler Hermes Enabling Digitalisation Index is a proprietary weighted index that assesses countries’ ability to provide the necessary environment for companies to grow internationally in the digital era and support digitalisation, which is the adoption or increase in use of digital or computer technology within an economy. The index is based on the quality of connectivity, which includes the number of secured servers, the ratio of internet users and available telephone lines; logistic performance; and business environment.
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