Finances

Will supply-chain bottlenecks scupper a trade V-recovery?

While global trade continues to bounce back from the pandemic, the shape of the recovery may change as we move forward, say specialists from NatWest Markets.

21 May 2021 . 2 min read

Global trade is now 3.4% above pre-pandemic levels, the highest level since October 2018, and fell by just 5.3% last year, note Peiqian Liu, China economist and Michelle Girard, managing director, co-head global economics, head of strategic coordination and business operations, US, both at NatWest Markets; and Rowan Austin, head of trade origination and advisory, corporates and institutions, NatWest.

Significantly, trade took just 11 months to recover from the outset of the pandemic, compared to 26 months from the beginning of the global financial crisis (GFC).

As global trade recovered from the pandemic, the East Asian economies, led by China, captured new market share, an expansion driven by work-from-home and medical products. An early lead in battling the crisis also buoyed import demand.

However, the NatWest experts stress that supply-chain disruption remains a risk. Even before the grounding of a large container ship in the Suez Canal in March, the Purchasing Managers’ Index (PMI) showed suppliers’ delivery times had dropped sharply in the US, euro area and Japan in February. In the UK, frictions in goods trade and administrative burdens are weighing on corporate supply chains, and both exports and imports declined by almost a fifth in January.

It is difficult to predict where bottlenecks will emerge as the recovery continues. Pent-up demand may outstrip supply, and corporates should strive for as much transparency of their supply chains as possible to identify risks to disruption, the experts advise. Only then will they be in a position to assess and mitigate these risks.

To read this article in full, and for more insights, visit NatWest Corporate & Institutions.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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