PwC's Macroeconomics team presents Global Economy Watch, a short publication that looks at the trends and issues that are affecting the global economy and details our latest economic projections for the world's leading economies.
Will “slowbalisation” snowball into the global services trade?
This edition of the Global Economy Watch focuses on an underreported area of the $6 trillion market of export services. Whilst most of the attention of businesses and policymakers has understandably focused on the global trade in goods which has been experiencing tensions, trade in services has been more dynamic as it has been growing at a faster rate than goods trade. Figure 1 shows the market shares of the big services sector which include travel, transport and other business services.
Service exports have traditionally been dominated by large advanced economies. Indeed, in global rankings of services exports, the US, UK and Germany continue to be the undisputed leaders. However, further down the rankings of the world’s largest services exporters, PwC is seeing some of the lagged effects of the shift in global economic power from the West to the East that first started with the manufactured goods sector but is now shifting into the services sector. China, for example, has overtaken Spain, Italy and Japan to become the fifth largest exporter of services in the world.
What does this mean for businesses in the advanced economies? One answer could be to invest in upskilling’ existing and future workers to tackle the challenge of automation in the future. This also makes economic sense as it could also help to lift labour productivity levels that have stagnated in most advanced economies since the 2008 financial crisis. Many large businesses have committed resources to invest in upskilling their staff. However, progress from companies around the world remains slow according to PwC’s latest Global CEO Survey1 , as only half of CEOs reported moderate to significant progress in their upskilling programmes.
Lastly, this report takes a preliminary look at some of the impacts the COVID-19 coronavirus is having on businesses and the global economy. We’ve already seen some disruption to the Chinese economy and to the travel and transport services sectors across the world. At the time of writing this report, around 92,000 people globally were infected by the virus, though this is changing from day to day as outbreaks occur outside China. Travel restrictions persist in a growing number of areas across the world. A growing number of businesses are now faced with both supply side constraints and travel restrictions imposed in relation to areas where infections are reported. Events on this issue are unfolding fast and it is too soon to quantify with any confidence the potential societal and business impacts of the virus. We will continue to monitor this risk.
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