Trade in services to hit new height, providing fresh opportunities – PWC
Economic outlooks for the year, especially a recent one by PriceWaterCoopers, a global consulting firm, see the service sector expanding from $5 billion in the previous year to $7 billion in 2020. Therefore, fields such as computer programming, call-center operations and other related ones that can be traded without borders will witness a surge.
The giant consulting firm sees continuous trade relationship in tangible goods across the globe slowing down due to tariffs and conflicts among top economies. In fact, it calls it ‘slowbalisation’. However, service is seen as largely immune to any of the disruptive factors.
It says, “One aspect of trade that is often neglected is trade in services, which is now about one third of the size of the global volume of merchandise trade. In contrast to goods, services remain largely unaffected from tariff wars. The latest 2018 data from the International Trade Centre (“ITC”) shows that the global export of services was worth about US$5.8 trillion, or around 3.5% of global GDP. We expect the total value of services exported to hit a record US$7 trillion by 2020”.
Meanwhile, the World Bank Group sheds light on the factors that will work in favour of the service sector. It highlights, “The falling costs of information technology and increasing access to the internet suggest that this trend will only grow, offering the possibility that more and more jobs in the developing world will be in the services sector”.
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Trade without-border and exporting of services is a goldmine. The US is a leader in that regard. Management software, utility apps, web design, security software, webinars, online ticketing, bookings and accommodation, and other platforms, developed in distant cities offer services to a global market from China, to Nigeria, to Guyana. While most of these services are based on subscriptions/ payment received through payment portals no tariff or VAT is added to cost. That is a key advantage for the sector.
In Nigeria, Andela, a tech training firm, is teaching young people how to code and programme while connecting them with distant users of such services beyond borders. The trained programmers don’t have to leave Lagos or Nairobi; they offer their services to firms in the US or Europe and get paid wherever they are based.
These are new opportunity and growth areas as a new era of economic possibilities unfold.