🚨 Global Trade in Flux 🚨
Citi‘s latest CitiGPS report (released yesterday) dives deep into the shifting currents of global trade and how they’re transforming supply chains in real-time. (full report in the first comment)
One of the most eye-opening insights? A graph revealing some drastic shifts in global payment flows from only 2021 to 2024.
As an Austrian, the ~23% drop in trade from China to the EU is particularly concerning. This unfortunately dovetails with the struggles of German industry (deeply tied to Austria’s economy), that have by now made it into the news more broadly.
💡 As an aside to attached graph: Citi would indeed have some of the best proxy data on trade flows, thanks to its Treasury and Trade Solutions (TTS) division – which is probably the strongest global payments franchise in the world. Having built a hard-to-replicate network of local/in-country presences, the guys at TTS can directly execute a large number of complex, cross-border transactions without needing other intermediary banks as support.
A few additional key takeaways from the report:
🌐 Resilience Through Diversification: The trend, continuing -> as geopolitical risks rise and protectionism grows, companies are moving to reduce concentration risk in their supply chains. The shift from China is gradually happening as companies explore near- and friendshoring options.
🇱🇦🇮🇳 Opportunities for LatAm & Asia: with China’s global manufacturing role under pressure, Latin American and other Asian economies are well-positioned to benefit. Trade relations between China and Latin America are booming, and supply chain ties across ASEAN and India are strengthening. (see chart)
💻 Semiconductor Supply Chains: National security concerns are pushing efforts to diversify semiconductor production away from Taiwan and to limit China’s tech ambitions. Strict export controls from the West further underline this trend.
