Hinrich Foundation and IMD Release New Sustainable Trade Index 2023

The 2023 edition of the annual Hinrich-IMD Sustainable Trade Index (STI) is outlined by a key shift in a post-pandemic world marred by geopolitical turmoil: towards the so-called “slowbalization”.

Economists generally mean by this term a slowdown in trade reform and weakening political and policy support for measures that open trade amid rising geopolitical tensions.

Of the 30 major trading economies studied by the STI 2023, the two that excelled in achieving such a balance were, for the second year in a row, New Zealand, and the United Kingdom.

In Asia Singapore jumped from 5th to 3rd place, Hong Kong eased one place to 4th and Japan dropped four positions, from 4th to 8th place. South Korea climbed two places to 6th while China slipped 3 places to sit 16th on the index.

As a response to an increasingly fragmented world, evidence from the STI shows a deterioration across key economies in non-tariff barriers and trade costs this year compared to 2022.

The world’s largest economies, which should be leading efforts to reverse “slowbalization”, are instead among the key economies that are raising tariffs, non-tariff barriers, and slowing trade liberalization, the data shows. This has posed challenges to how states can properly use trade to manage and promote their economic, societal, and environmental sustainability.

“Economies that balance trade and sustainability well tend to be the more developed ones, in which the cost of making trade more aligned to the Sustainable Development Goals is lower,” says Professor Arturo Bris, Director of IMD’s World Competitiveness Center, which produces the STI in partnership with the Hinrich Foundation.

“With global trade challenged by geopolitical and health issues, the work of streamlining supply chains and reducing costs has become paramount, even at the expense of social or environmental considerations in global trade. Our index sheds light on how this trade-off is being played out,” Bris added.

The Hinrich Foundation is an Asia-based philanthropic organisation that works to advance mutually beneficial and sustainable global trade.