Hong Kong SAR has dropped seven notches in the latest DHL Global Connectedness Index 2022, which provides findings on globalization trends by analyzing 13 types of international trade, people, capital, and information flows.
In a statement, DHL noted that in this year's edition of the index, Hong Kong SAR landed at the 31st spot out of 171 economies in terms of its connectedness, dropping seven notches since 2019.
"Despite the drop, Hong Kong was listed fourth on the depth score among the top economies with the largest international flows relative to domestic activity, following Singapore, Belgium and the United Arab Emirates," the report said.
It added that Hong Kong also stood out specifically on trade depth, taking the second spot overall and first on merchandise exports and imports.
The report noted that economies with higher depth scores tend to be both wealthy and relatively small.
Meanwhile, advanced economies with limited internal markets will have a larger share of their trade, investment, communications, and even people, outside of their own borders.
Globalisation not in "reverse gear"
"The latest DHL Global Connectedness Index data clearly debunks the perception of globalization going into reverse gear," said John Pearson, CEO of DHL Express.
"Globalization is not just a buzzword, it's a powerful force that has transformed our world for the better. By breaking down barriers, opening up markets and creating opportunities, it has enabled individuals, businesses and entire nations to flourish and thrive like never before."
Responding to the results of the DHL Global Connectedness Index 2022, Ng Chee Choong, senior vice president and managing director of DHL Express Hong Kong and Macau, noted the resilience of Hong Kong.
"Amid global challenges, Hong Kong remained resilient and connected with top economies around the world, with the outstanding performance on the trade depth as a strong proof," Ng Chee Choong said, adding that DHL is committed to its Purpose of 'Connecting People, Improving Lives'.
"Our innovative and connected facilities and infrastructure in Hong Kong, boosted by the soon-to-be-launched Central Asia Hub expansion, ensure that we can fulfil our customers' needs in the post-covid era as we bolster Hong Kong's connectedness," he added.
The new GCI report also contains a ranking of economies that share Hong Kong's external flow, with mainland China on top of the list with 57%, followed by the United States (6%), Singapore (5%), and the United Kingdom (4%).
"While Hong Kong has long served as a gateway for flows between Mainland China and the rest of the world, it is no surprise that it is a strong outperformer in-depth," the report said, noting that what might appear to be more surprising is its underperformance on breadth.
"The reason for this is that it is so closely connected to the mainland: in 2021, the combined trade, capital, information and people flows that took place between Hong Kong and Mainland China made up 57% of its external flows," it said.
"The rest of Hong Kong's connections were spread throughout the world, although primarily with the large Asian economies. The United States and the United Kingdom also feature prominently in Hong Kong's connections."
The report also showed that international flows have been remarkably resilient in the face of recent shocks such as the Covid-19 pandemic and the war in Ukraine.
After a slight decline in 2020, the composite DHL Global Connectedness Index rose back to above pre-pandemic levels in 2021.
The currently available data points to a further increase in 2022, despite slower growth in some flows.
International trade in goods was 10% above pre-pandemic levels in mid-2022. International travel remained 37% below 2019 levels in 2022 but doubled compared to 2021.
Some of the other findings of the report include evidence that the US and China are "decoupling in many fields." It said that based on 11 types of trade, capital, information, and people flows — such as merchandise exports, M&A transactions, and scientific research collaboration — the share of US flows with China declined for 8 out of 11 types since 2016.
In the same period, the share of China's flows with the US decreased for 7 out of 10 types with data available for China.
"Nonetheless, the US and China are still linked by far greater flows than any other two countries that do not share a border. Further, the data shows that, so far, the decoupling between these two countries has not led to a broader fragmentation of global flows between rival blocs of countries," the DHL report added.
It also found that the volume of world trade in goods reached 10% above its pre-pandemic level in mid-2022, and trade in services also surpassed pre-pandemic levels last year.
Trade growth, however, is forecast to slow in 2023, mainly due to slower global economic growth.
For the period, the DHL Global Connectedness Index 2022 found that the Netherlands was the most globally connected country in 2021 after falling to second place in 2020.
Singapore ranked second overall and first in terms of the size of international flows relative to domestic activity. The United Kingdom had the most globally distributed flows.
The DHL Global Connectedness Index 2022 report was commissioned by DHL and authored by Steven A. Altman and Caroline R. Bastian of New York University Stern School of Business.
