Global trade recovery faster than expected (source Lloyd’s List)

The recovery from the impact of the pandemic could be quicker than that following the global financial crisis, survey finds

Businesses are optimistic that trade levels will return to pre-pandemic levels within two years. But supply chains are likely to change as businesses seek more resilience. GLOBAL trade is expected to return to pre-pandemic levels at a faster rate than recovery following the global financial crisis, but business leaders still expect it will take one to two years before economic activity returns to 2019 levels.

A survey of 800 executives commissioned by DP World and conducted by the Economist Intelligence Unit between October and November last year found that 70% of businesses expect trade will recover to pre-pandemic levels more quickly than recovery after the financial crisis of 2008.

The global economy took just over two years to recover from the financial crisis, but 43% of respondents said they expected it would take only one to two years to return to the levels seen in the first half of 2019. Nearly a third thought the recovery would be twice as fast, with trade returned to pre-pandemic levels within a year.

“Eight months ago, the world trade outlook for 2020 was worse than grim,” the report said.

“The World Trade Organisation released a report in April forecasting that, in its worst-case scenario, the pandemic could push trade down by as much as 32% by year’s end.”

With most of the world’s major economies in lockdowns, international travel had come to an almost complete stop and supply chains for essential goods appeared on the edge of collapse.

“However, data covering the first few months of the second half of year show the fall-off lessening, and a recovery appears underway. As of December 2020, the WTO forecasts a 9.2% annual decline in trade, still a substantial drop, and slightly better than the current EIU forecast of a 10.6% fall, but far from the disaster once feared.”

Despite the economic impact of the pandemic, 42% of survey respondents said that their businesses’ international revenues expanded in the first half of 2020. A fifth reported no change from the previous year.

“These figures are encouraging at a time when only one of the world’s major economies, China, is registering economic growth,” the report said.

Nevertheless, the pandemic had brought “lasting change” to the way companies did business, it added, with 83% of respondents indicating that they are in the process of reconfiguring their supply chains by switching or adding new suppliers, using different logistics providers or changing production or purchasing locations.

“The impact of the Covid-19 pandemic has redefined how the world stays connected, and companies conduct business,” said DP World chairman Sultan Ahmed Bin Sulayem.

“Moments of crisis have historically served as a powerful impetus for innovation. The effects of the pandemic have accelerated the transformation of the supply chains and prompted rapid adaptation to ensure resiliency in international trade. The global business community has risen to the challenge and taken strong and decisive action to make supply chains more robust and agile, the benefits of which will be reaped in future years.”