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The ongoing challenge for business owners is staying ahead of anything that may negatively affect their company and trading conditions. There is no time for navel-gazing. Analysing the PEST (political, economic, social and technology) external factors usually offer up evidence to support new goals and allow a business to plan ahead. Hence, they get a head start on any event that can be a game-changer like Covid-19.

At BusinessBlogs we often write on the topic of technology, and how it has revolutionised our lives and what we do commercially; however other external factors also play a core role in changing the face of business.

Economic, political or social change is equally as disruptive as the technology for business so, in this blog article, we look at some of the potential obstacles that may affect business in the short term.

Economic Predictions

The US Election result has calmed the West to allow nations to focus on economic recovery and vaccinating against the Coronavirus and its variants.

Economic stimulus will continue as will low-interest rates to overcome the challenges faced globally with lockdowns. Some industries may never fully recover to their pre-Covid level. Hence, businesses in these sectors need to focus on innovation and change management to operate efficiently with remote workers and eCommerce stores.

Services

Trade wars are still a thing and one area of globalisation that’s not been affected by trade wars is services. Global services trade is expected to hit $7 trillion, which is about a third of global merchandise trade.

Top Exporters of Global Services

The five big players in global services are China, France, Germany, UK and US. China has recently taken over the fifth position from the Netherlands. Here is a list of the top 10 countries.

  1. USA (14.3% of global total)
  2. UK (6.5%)
  3. Germany (5.7%)
  4. France (5%)
  5. China (4.6%)
  6. Netherlands (4.2%)
  7. Ireland (3.5%)
  8. India (3.5%)
  9. Japan (3.3%)
  10. Singapore (3.2%)

Brexit

How Brexit is impacting the services trade for the UK will still not clear given the lockdowns. The EU absorbs the largest share of exports so if the UK is treated like non-member then businesses will need to abide by new rules. The Independent says Brexit will decimate the UK services industry however EU has also been hit hard with the pandemic so how and when the services sector bounces back to normal is still unknown.

In 2018 41% of services trade went to EU members. While the EU trade is at stake so is the preferential agreements between Japan and Canada.

So time will tell just how the UK will perform in global services trade in the years ahead.

Economic Growth

In pwc’s article, global trade is predicted to grow by 3.2 per cent in 2020 with all major economies growing due to favourable financial conditions. Did you know China is expected to grow at around 6 per cent, which is equivalent to adding that of Saudia Arabia to the world’s economy? True and in terms of global trade leaders, India’s rise, which is on a trajectory to become the world’s third-largest economy behind China and the USA by 2030.

Jobs

Good news on the jobs front with 10 million new jobs expected from the G7 and emerging economies. Though China and Russia’s workforce bucks the trend with a shrinking workforce.

Population

Will the population rise? Of course, we’re living longer, so we’re an ageing population with Japan leading the way as the ‘greyest’ country. Thinking of starting a business in 2020? Consider what you can do for the baby boomers and retirees.

Summary

Globally business and economies are experiencing unusual trading conditions. A top priority is that of a nimbleness, i.e. Trading nations need to be quick to change as markets and economies demand it.

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