ATW Digital Series: Conversation about global trade developments
On the 10th June 2020, we joined Francois Fouche of Trade Research Advisory in a conversation about the current global trade developments.
In addition to its terrible impact on human health and mortality, one of the immediate consequences of the pandemic is the massive disruption of global trade. According to UNCTAD, global exports could drop by US$ 50 billion as a result of the closure of factories, shops, and the imposition of travel restrictions. In particular, global value chains dependent on China, has suffered significantly. China is the world’s foremost supplier of goods, delivering 13% of world exports in 2019. It is an essential supplier of intermediate inputs such as precision instruments, machinery, automotive, and communication equipment, on which countries in especially the EU, the United States, and Japan depend.
In recent weeks there have been reports of precipitous declines in exports of everything from items such as Australian wine, New Zealand logs, and lobsters, American soybeans, to Brazilian beef and German automotive parts to China. While China is opening up to the world of trade again, as a result of the Coronavirus shock, it is expected that many companies will critically re-evaluate and possibly reduce their dependence on China. They will try to re-shore their value chains or to spread their value chains geographically, with redundancy in mind. It is expected that many companies will critically re-evaluate and possibly reduce their dependence on China. Many countries will also try not only to reduce their dependence on Chinese imports but also to find alternative markets for their current exports to China — in other words diversify.
However, it is key that companies proactively start strategizing on how to identify and capitalise on opportunities post COVID-19 and lock-down to ensure they create new business and recover. The world of global trade is changing and will be quite different after the pandemic.
View the webinar below: