(Data Source: UN Impact of the Covid-19 Pandemic: United Nations, Geneva 2020)
We are approaching the summer of 2021, with Europe and most of the world not yet beginning to emerge from the economic catastrophes caused due to the pandemic outbreak of Covid-19.
It was foreseeable by many, that the plan for getting back to near normal is for whole populations to be vaccinated and only those with proof of vaccination to be allowed passage and access to the world as we once knew it. We are seeing examples and trends in countries Israel which are starting to get back to near normal after immediate and mass vaccination of most of their populations. (see table below)
(Data Source: Our World in Data)
The pandemic has had a serious effect on economies and on international trade, varying from region to region, relevant to each region’s diversities of strength. Economists predicted that the trade war with the USA to minimize China’s foreign trade would be devastating, by foreseeing this and countering the effect, fifteen countries in the region with China at the helm, signed the Regional Comprehensive Economic Partnership (RCEP) in December 2020. This is the largest trade deal to date, covering a third of their population and approximately 30% of their GDP. Due to this we have seen a much quicker than expected recovery and transition in North Asia economies such as China, Japan and South Korea. They have proven to be more resilient, with China emerging much stronger from the pandemic than was forecasted.
The below table illustrates that during the first half of 2020 China has managed a smaller decline in exports in relation to other major exporting countries and has shown significant growth in other areas such as textiles and office machinery.
(Data Source: Pg15, UN Impact of the Covid-19 Pandemic: United Nations, Geneva 2020 )
The following graph shows global growth for the past 2 decades as well as the pandemic’s impact for each category of countries whether developed or developing.
(Data Source: Pg13, UN Impact of the Covid-19 Pandemic: United Nations, Geneva 2020)
The graph below demonstrates the dramatic effect on global trade due to Covid-19 making the magnitude obvious by making a visual comparison to the global recession of 2008-2009 which makes the pandemic effect seem somewhat smaller but spread out over a longer period.
(Data Source: Pg14, UN Impact of the Covid-19 Pandemic: United Nations, Geneva 2020
Other changes like digitization are forcing institutions like banks for example to loosen their stronghold in the financial world due to ease of entry of more cost-effective online competitors. Offering borderless cryptocurrencies, exchange and transfer transactions with lower costs to clients due to much lower overheads and unlimited global reach via the web.
As businesses we surely cannot form government or international cross border policy. We can however influence and explore new and better options. Businesses must build the flexibility to better adapt to challenges ahead and in our ever-changing world with large even timely economic fluctuations. These options must be formulated for sustainable growth while at the same time protecting the business environment which will in turn mitigate future pandemics and global disasters.
References:
----------------------------------------------------------------------------------------------
*Eptagon Business Solutions is a subsidiary of the Eptagon Group of Companies to learn more about our Group visit our website: www.eptagongroup.com