SEA – the strongest gainer of global trade


Covid-19 has delivered one of the biggest shocks to global trade since the Great Depression.

This year, global trade is expected to decline by 20% and not regain its 2019 absolute level of US$18 trillion until 2023, a report by the Boston Consulting Group (BCG) says.

Global trade flourished with the liberalisation of markets over the years, although scenarios such as Brexit and friction between the United States and China and the European Union (EU) had threatened global free trade.

But the pandemic has triggered more damage. BCG cited two negative effects – falling demand and a global recession. The other is that global lockdowns, the control of shipments arriving at ports, and export bans on some medical and agricultural products has disrupted existing supply chains.

It is hard to predict when the global economy will recover. Lower trade flows are because of decreased demand for traded goods due to deep recessions and structural economic damage. Low demand will, in turn, affect pricing, particularly commodities.

The pandemic has also exposed structural flaws. It is time companies rebuilt the resilience of their manufacturing and supply networks, even though it means spending more. They must be ready for future shocks.

Amidst all this, South-East Asia will continue to be one of the strongest gainers, increasing two-way trade by around US$22bil with the EU, US$26bil with the US, and US$41bil with China by the end of 2023.

Based on its own simulations, BCG says the combination of geopolitical shifts, economic recession and new supply chain structures is likely to lead to a short-term decline in global trade of 20% to 30%, with full recovery unlikely before 2023.

Asean, India, and North Africa are likely to benefit from these shifts, BCG says.

CLICK TO ENLARGECLICK TO ENLARGE

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Business News

Scientex posts higher Q3 earnings, says Covid-19 lockdown to impact project billings�
FBM KLCI in the red as key heavyweights weigh
Singapore’s GIC buying 16% stake of Sunway Healthcare for RM750m
Moody's affirms Cagamas' A3 ratings; outlook stable
MGS yield curve steepened on lockdown due to infections surge
Euro zone business growth at 15-year high as demand unleashed -PMI
Pharmaniaga takes up financing facility under StanChart’s RM4.17b fund
Asian currencies gain as Fed reassures on rates; Thai cbank in focus
Aeon earmarks RM251mil for capex
Sanichi MD, PNE PCB ED launch takeover of BSL Corp

Stories You'll Enjoy


Vouchers