Global trade suffered during Covid, with UNCTAD data showing a decline of -4.5 per cent year-on-year (YoY) in Q3 2020, compared with the Q2 YoY decline of -19 per cent. Total global trade in 2020 is estimated to have declined between 7 to 9 per cent. But in Q4 2020 some countries did show export recoveries.
Trends: Covid caused export declines for most of the world with a few exceptions:
- None of the major economies have been spared from the downturn in international trade
- Vietnam, China, Taiwan (China) and Turkey experienced export growth in Q3 2020 compared to the same time in the previous year
- Developed regions like the US, EU and Japan have experienced some of the sharpest declines in exports during the period
- While natural resource exporters like Australia and Russia still saw declines in their exports compared to the same month a year earlier, some of their counterparts like South Africa and Chile have seen their exports recover in November 2020
- Fluctuations and volatility have increased
Upshot: Global trade experienced severe fluctuations last year causing at least a temporary re-ranking of export winners and losers. The pandemic exacerbated international trade declines which were already being tested by a US-China trade war. Some countries managed to emerge as winners in this situation, while most did not. Key takeaways:
- Asian countries like China and Vietnam, which contained the pandemic well, were able to jumpstart their manufacturing sooner than their competitors
- This led them to regain export orders, plus leverage their manufacturing prowess to focus on exporting essentials like PPE to the rest of the world
- Although widespread declines in international trade in Q2 2020 has been similar for developing and developed countries, trade in developed countries appears to have fallen off faster, both for imports and exports
- Countries reliant on exports of natural resources saw some of the sharpest declines when most of the world went into lockdown, but with the situation improving in certain regions, these countries are experiencing strong export growth to meet the pent-up demand
Imperatives: Significant uncertainty is expected for international trade in the coming months due to the persistent concerns about the effects of COVID-19 on economic activity. The resurgence of the pandemic in certain regions in recent months and the prospect of increases in trade restrictive policies mean that it is a crucial time for procurement managers to re-evaluate and reconstruct their global procurement strategies.
- Global supply chains are shifting, and supply chain managers must take note
- Expect more changes to occur, and position accordingly
- Look at new markets that will matter over the short, medium and long term
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