CONTRARY to the notion that the growth of global flows has gone into reverse in view of a series of global conflicts and public policy headwinds, the level of global connectedness has never been higher, according to DHL.

The German logistic giant released its Global Connectedness Report 2024 on Wednesday (Mar 13).

Published regularly since 2011, the report was conducted in collaboration with New York University’s (NYU) Stern School of Business and studied almost nine million data points covering international trade, capital, information and people flows.

Trade growth played a crucial role in boosting global connectedness. “The share of global output traded internationally was back to a record high level in 2022,” revealed the report. “After a slowdown in 2023, trade growth is forecast to accelerate in 2024.”

This comes despite US-China ties continuing to diminish, with the shares of both countries’ flows involving each other decreasing by about 25 per cent since 2016.

“It is important to recognise that the level to which the US and China were connected in the past was extraordinarily high,” John Pearson, chief executive of DHL Express, told The Business Times.

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“Even with the drop, both countries remain significantly connected, the drop merely brings them back to a similar level of connectedness as any other pair of countries,” he said.

The report found no empirical evidence for a split of the world economy between rival geopolitical blocs.

The report said: “The share of trade happening between US-aligned and China-aligned blocs increased during the Covid-19 pandemic, and then fell after Russia’s full-scale invasion of Ukraine. Excluding Russia, it is now back roughly to its pre-pandemic level.”

Neither has regionalisation given way to globalisation. The report said that most international flows are taking place over stable or even longer distances, with a declining share happening inside major geographic regions.

“Deglobalisation is still only a risk, not a current reality,” said Steven Altman, director of the DHL Initiative on Globalisation at NYU.

The data on information and people flows, however, paints a less rosy picture.

Among all aspects of globalisation covered in the report, information flows had the largest increases over the past two decades, but the latest data showed this trend was stalling. The report partially attributes this to tensions between the US and China, which have dampened international research collaboration. Additionally, many countries have imposed restrictions on international data flows.

People flows were hit hardest by the Covid-19 pandemic, but they continued a strong recovery trend in 2023. International travel reached 88 per cent of its pre-pandemic level and was on track for a full recovery by the end of 2024, the report found.

Nevertheless, Pearson highlighted that the current globalisation level was only pegged at 25 per cent, far from a 100 per cent idealist scenario where borders and distance do not matter at all.

“The opportunity for more globalisation is absolutely there,” Pearson explained.

Pearson added that corporate global expansion is a new trend not observed in the past. “Companies are investing a larger share of their money in overseas markets, overseas sales plans and overseas offices than ever before,” he noted.

The report ranked Singapore as the world’s most globalised market, with another Asian economy, Hong Kong, coming in at tenth place.

“Singapore has large international flows relative to the size of its domestic economy, due in part to its public policy to effectively integrate itself into the global economy,” said the report.

The Republic also topped the charts on the trade and capital pillars, with total merchandise trade between 2019 and 2022 jumping 33 per cent from 701 billion euros (S$1,021.1 billion) to 937 billion euros.

“Singapore has invested heavily in strengthening our physical and digital connectivity to the world because trade is our lifeblood,” said Chan Ih-Ming, executive vice-president at Singapore Economic Development Board.

He highlighted that the government “looks forward to partnering with global companies seeking a launch pad for business growth and supply chain expansion in Asia-Pacific and beyond”.