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Post Brexit and the changing global trade landscape
Table of Contents
In this jeopardized business environment, globalization has created adverse impact on overall performance at global scale. Globalization refers to the increasing trend of interaction between people and companies within worldwide scale. With the intense transformation within technology and global trend of business, organization has faced both positive as well as negative consequences. This report will enlighten the key trends in trading service between commonwealth countries for understanding this substantial impact. Impact of Brexit in the UK aviation industry will be narrowed down to understand current link of economy as well as global business performance. Difficulties in Multinational bushiness preference will be analysed to identify the field of business improvement.
Key trends of goods and services are required to be analysed for understanding following status of trade in common wealth countries. These key trends are as follows:-
- Volume in international trade in goods
- Trade flows across region
- Market share of trade in services
The reflection of these keys is indicated in trade through import as well as export propensity. As per report of 2013, combined exports of goods and services are valued at $3.4 trillion. Here 53 commonwealth members are combines and 15% of total world exports have been visualised. Since 2000, members have collectively grown their share just above 50 percent. In this landscape, growing significance of developing countries in the world economy has presented vast trading opportunities for the commonwealth members. In China, commonwealth member’s trade expansion is assumed as spectacular nature. Average 12 percent of commonwealth goods import is sourced from China (thecommonwealth.org, 2015).
Figure: Exports share of goods and services in commonwealth countries
(Source: thecommonwealth.org, 2015)
Impact of key trend in the commonwealth countries from the scenario of business economy
According to Taylor Buck and While (2017), commonwealth members have fully recognized the value of international trade from the angle of achievement on social as well as economic progress. Social, economic as well as fundamental changes have been taken place in the global trade, which influencing the direction of trade. Such changes are mainly driven by the factors of Global value chain or GVC. As per the opinion of Cocks (2016), lack of dynamism in trade multilateralism has created impact on business actions. The global economic slowdown has been visualized during the global financial crisis in 2008 (ons.gov.uk, 2017).
At that time world economy was less than 3 percent in comparison to average growth of 7 percent. Now the contextual analysis is required for understanding this changed rate from the dimension of global forces. It has significant impact on the trading of goods and services. As per the theoretical demonstration of McKinsey, four global forces are urbanization, technological change, aging challenges and financial connections. Financial connections are related with both trade and people. The countries are becoming much more urbanized. As per the report, 65 million per year rate is visualized in the scale of urbanization. It has been identified that emerging economies are also major forces. By 2025, emerging economies will grow up to 75 % faster. In relation to urban consumer class, 150% increase in annual consumption has been expected between 2010 and 2030 (wti.org, 2015).
Figure 2: Global Forces
(Source: mckinsey.com, 2015)
On the other hand, Seabrooke and Wigan (2017) commented that technological change has also driven significant impact on the business. In the current period, technological breakthroughs are speeding up, where consumers prefer online systems to fulfill their daily needs. In this scale, 14% increase in global workforce has been visualized in proportion to increase in global life expectancy. However, productivity is dependent on this workforce. If the productivity not increased, GDP growth of the developing countries can be declined. The volume of trade, people and finance are increasing and reflected in systematical changes on the economic stability. The trends in the good and service trade have experienced challenges from the globalization. These consequences are increasing interdependence of location and increasing interdependence of firms.
Trade in both goods and services have direction to gain maximum increase on GDP by 2020. In this scale, total value of foreign investment is an integral part. As per the report, United States, East Asia and Europe dominate the global FDI. They are also dominating the global market region of South America, Middle East, South East Asia and Africa. These are increasingly attracting the investment flows. Flows of capital are broadening remote geographies and populations. Financial globalization has also created impact on the cross border lending. As per the current report, some US and UK banks have reduced their foreign business However, new era of financial globalization has maintained more stability, which is effective to maintain higher share of gross capital flows. The commonwealth has made up small part in UK trade. As per the report of 2015, 9% of total UK exports went to Commonwealth in 2015. EU has accounted 53% of UK imports. Before Brexit, UK services export to commonwealth has been tripled from £8.5 billion to £22 billion. Therefore, key trends are the major outline, which have hampered this rater after Brexit in UK.
It has been visualized that the outcome of UK’s referendum on EU membership can display opportunities in UK economy. Travel and Aviation industry has been influenced through international politics as well as trade. Any major changes can create direct impact on every dynamics of these sectors. However, the governmental referendum has created uncertainty on aviation sectors.
As per the report, the country is facing a tradeoff for accessing the European single Aviation market. The immediate impact on the air traffic can be governed through understanding two key variables, which are sterling exchange rate and economic activity. It has been visualized that Brexit has given a negative shock to UK economy.
In this scale, uncertainty has been occurred in .............
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