The great lockdown and global trade – MENAFN.COM

The great lockdown and global trade – MENAFN.COM

(MENAFN - Gulf Times) Trade is recovering robustly alongside the upticks in growth in major economies. This good news deserves more attention. Less than 12 months ago, many observers were predicting an end to globalisation. The pandemic disrupted supply chains, and governments, suddenly confronted with the resulting vulnerabilities and dependencies, encouraged ''reshoring" production of critical goods. Today, the outlook is much brighter. There is little indication of a sustained movement away from global supply chains. And many governments have realised that trade is more of an opportunity than a threat to national sovereignty. As a result, the World Trade Organisation expects the volume of global trade to increase by 8% in 2021, more than offsetting last year's 5. 3% decline. True, foreign direct investment (FDI) still lags, having plummeted 42% in 2020. Europe actually recorded a negative flow. But the pandemic's differential impact on trade and investment is not surprising. Transporting goods around the world requires little physical human interaction. Giant cranes, often remotely operated, load and unload containers, and supertankers pump oil ashore. In contrast, acquiring a firm or establishing a new production facility in another country requires travel to meet potential partners, and in many cases close contact