Digital technologies already have an important role in global trade, from digitising trade documents to expanding cross-border e-commerce. But the advent of 5G could revolutionise goods and services trade globally.
This fifth generation of mobile communication offers faster connectivity than 4G, low latency and greater bandwidth. Better mobile-phone connectivity via 5G could help make shopping online from abroad easier and allow more products to be delivered digitally.
Connectivity is paramount for society. It facilitates access to employment, healthcare, entertainment, commerce and services, both in developed economies, where about 80 per cent people are online, and in emerging countries, where the figure is about 45 per cent.
But given the fast growing use of mobile internet and increasingly sophisticated applications on mobile phones, 5G offers more-efficient technology plus new bands of spectrum. In fact, without 5G it is likely that 4G networks would face severe congestion within two years.
By 2025, 5G is forecast to account for 20 per cent of global mobile connections, according to GSMA, with uptake led by South Korea, mainland China and the Middle East.
Mainland China continues to lead global 5G deployments, with around 70 per cent of the world’s base stations and an estimated 283m network users.
Rolling out 5G could add USD2.2 trillion to the global economy between 2024 and 2034, according to some estimates. The main beneficiaries could be manufacturing and utilities, especially in mainland China, and professional or financial services in North America, North Africa and the Middle East.
We expect 5G to revolutionise goods and services trade by boosting cross-border mobile commerce, enabling more products to be delivered digitally or remotely, and through increased trade in tech equipment such as chipsets and mobile phones.
Estimates suggest that mobile trading – m-commerce – could approach USD4.5 trillion or nearly 70 per cent of all retail e-commerce sales by 2024. With better mobile connectivity, people could increasingly buy online rather than visit shops.
Consumers will be able to view products more quickly and 5G may also aid virtual shopping experiences, for example by enabling interaction with a realistic human avatar with artificial intelligence helping to answer questions. Eventually 5G could help support augmented-reality glasses for even more immersive commerce experiences.
And with 5G’s rollout coinciding with the shift towards better mobile-based payment methods, it could speed up the payment process, further accelerating the trend towards m-commerce.
The resulting productivity gains will encourage investment in 5G. One phone manufacturer forecasts that 7 per cent of Sub-Saharan Africa’s mobile subscriptions will be 5G in 2026, and 34 per cent of Latin America’s. For India the forecast is 26 per cent, while for South East Asia and Oceania, 33 per cent.
Digitisation has already seen physical products such as music and movies move to digital files under streaming models: looking ahead, 5G could increasingly enable video games to be streamed online too.
Services traditionally delivered in person could also become digitised. For example, telemedicine and remote surgery using haptics may be more viable as connections become more reliable, lag-free and faster, while 5G could also expand cross-border services trade – from virtual tourism to remote-based maintenance – reducing the need for professionals to travel abroad.
First published 24th August 2021.
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