Mumbai: Moody’s Investors Service on Wednesday released a sector in-depth study report titled “Global Trade Monitor – May 2020”.
Here are some key findings of report:
Global trade will contract sharply this year amid a sharp decline in consumer demand and investment and supply disruptions:
Global trade will contract between 13% and 32% this year, according to the WTO. Key reasons are the coronavirus-induced drop in consumer demand and investment in the current quarter, and disruptions along supply chains and shipping routes resulting from coronavirus lockdowns. Consumer demand will recover only gradually in the second half of the year.
The coronavirus will lead to more fragmentation of trade in essential goods:
More than 90 countries have imposed restrictions or bans on exports of medical and food supplies, as shortages pose unprecedented challenges for governments and health systems. In addition, the pandemic will complicate and possibly delay US-China “phase two” trade negotiations, and UK-EU and US-EU negotiations.
Ongoing shifts in supply chains will likely accelerate:
A move to more regional supply chains, which was already occurring in the auto and electronics sectors, could also accelerate, as well as further shifts toward domestic production of critical goods such as pharmaceuticals and food. Japan and India recently announced plans in this direction. The crisis has also laid bare the vulnerabilities of just-in-time supply chain management and could prompt companies to consider moving supply chains closer to their final markets and building redundancies. Data flows and trade in digital services may accelerate as more consumption and work shift online.
