The Covid-19 pandemic was supposed to derail Globalization and prompt a retreat into a new era of protectionism. Instead, some are now calling the crisis the Great Accelerator.
The drop in international commerce was steep during the first coronavirus lockdowns, but a rebound fuelled by fiscal and monetary stimulus has been sharp. Global trade is finishing the year on a strong upswing.
Following two years of the U.S.-China tariff war, trade carried out through sprawling networks of suppliers are acting as lifelines to consumers and shock-absorbers for many businesses.
“What we have learned is supply chains are flexible and adaptable,” World Trade Organization Chief Economist Robert Koopman said in an interview. “Trade is part of the solution.”
Natalie Blyth, the global head of trade financing at HSBC Holdings Plc, isn’t seeing companies recoil supply chains to their domestic markets to protect against new risks. On the contrary. She holds the view that the pandemic is acting as the “great accelerator” when it comes to trade, particularly with the aid of technology, as companies strengthen regional bases while eyeing a burgeoning middle class of some three billion consumers across Asia.
At the beginning of the year the WTO predicted global trade flows could fall by as much as 32%, which would have exceeded the worst decline of the Great Depression. If current figures hold through the fourth quarter, the WTO projects global merchandise trade will only fall by 9.2% in 2020, which is less than the 12% drop in global trade in 2009 at the height of the financial crisis.
India fastest growing Economy in 2021?
Nomura projected India to be the fastest growing Asian economy in 2021, with an estimate of 9.9% gross domestic product (GDP) growth in the coming calendar year.
“We have a positive view on India’s cyclical outlook, we are pencilling in a GDP growth rebound to 9.9% (in 2021) versus -7.1% in 2020. Near term, virus resurgence is a risk, but we don’t think this would derail the cycle, which we believe is set to accelerate further”.
Indian Commerce and industry minister Piyush Goyal on Tuesday said India is witnessing V-shaped recovery amid the Covid-19 pandemic and the country has seen a growth in foreign direct investment in the first nine months of FY21.
The minister said that FDI flows have been continuously growing and that in the April-September period, which is the first half, FDI inflows were about $40 billion, 13% higher than last year.
He said the government’s reform focus is on capital, labour, land and removing barriers to new businesses and that even before the onset of the pandemic, India was rapidly announcing a slew of reform measures aimed at improving the economy and productivity levels in the economy.
The vaccine pivot point at which vaccines start to become more widely available and show demonstrative success in suppressing the virus, allowing governments to lift most social distancing restrictions and citizens to become less fearful.
We will have to see what 2021 has to offer all of us; however, the biggest product of globalisation and where India is leading is the speedy development of Covid vaccines, with investment and scientific expertise being shared across borders, and production hubs and distribution channels forming around the world.