Will the global trade overcome the COVID-19?

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    The world commercial activity was on the verge of death during the pandemic of COVID-19. Some people have predicted that this year the size of global trade will be over 30% lower than in 2019. Still, after the collapse of spring, the size of trade has registered its greatest monthly increase. Oxford Economics, a consulting company, predicts that the global trade scale may fall by 10% in 2020.

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    Will the global trade overcome the COVID-19?

    In 2009, when global GDP fell by 0.1% in the last year of the economic crisis, but some companies due to this have suffered an enormous 13%. This year, the IMF predicts that global GDP could fall by 4.9%, 50 times more than in 2009. So, why is the suffering of trade smaller?

    Financial crisis

    Due to the financial crisis, the trade size has decreased significantly more than the GDP, mainly because the people refused to buy heavily traded durable goods (such as cars, etc.). But under the circumstances of the current crisis, the domestic services have suffered more damage than in 2009. No one goes to the cinema or coffee shop at the moment of self-isolation. And the demand for imported goods reduces dramatically. These things have made a fall in trade relative to GDP much smaller.

    In addition, the reliability of the apparatus of global manufacturing has formed the basis of commercial flows. COVID-19 has damaged the supply chains, but they have begun to restore in a short time in Asia. Also, the economics of China and Germany has quickly revived after the blockade. The factories of these countries opened production and multiplied export rates.

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    The politicians have played an essential role in the restoration of trade. The monetary and economic support was bigger and faster than it was awaited.

    Even if the current state of global trading is seen as a reason for relief, no one should report a victory. The second wave of the blockade and excessive expansion of come countries (USA, China, South Korea, and Germany) together with too strong fiscal stimulus may derail the recovery. As an example, it can serve the first commercial agreement between the United States and China. It was created to increase American exports to China but did not produce the expected results.

    However, world trade is not as bad as all almost feared. It is able to recover quickly from the crisis of COVID-19, at least, of course, if nothing, something greater will not happen.

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