International trade & supply chains: a retrospective of 2020

It is no secret that 2020 was quite the year for the whole world. We saw the effects of the pandemic on international trade and how it started the conversation on regional supply chains. Let’s reflect on what this year brought for the world in this market retrospective.

2020 might have been a rough year, but we learned much about it

At the start of the year, 2020 was set to be a year of international trade. Although the trend towards reshoring was likely to increase, imports and exports from Asia were proving to be the key in production lines across the world.

As the year went on, there was news of a new virus in China that was rapidly spreading in some populated areas. Nevertheless, it was thought to be manageable. It was reported to be a short-term threat by the Institute of Exports & International Trade.

“Coronavirus poses a short-term threat to exports to China, having already impacted global supply chains and the Chinese economy. In an attempt to control the outbreak, the Chinese Government extended the Lunar New Year holiday. This had a knock on effect on freight, with vessel sailings cancelled and reduced flights to and from China, especially in areas such as Wuhan and Ningbo.”

Soon after, we would see the full effect of a new pandemic.

Covid-19 outbreak acts as a major barrier for global trade in 2020

global trade in 2020

As the world-wide spread of the virus started, the global market suffered the consequences. Amongst the industrial sectors most affected were chemicals, transport, automotive, textiles and electronics.

“On a global level, losses in trade in goods and services are estimated at more than USD300 billion. The impact of the Coronavirus on the world economy is now greater than the equivalent of a year’s worth of trade war between the United States and China.”
stated Ed Goos, CEO of Euler Hermes BeLux.

During March, China and Italy were the most affected countries, although Taiwan, South Korea, the Netherlands, Hungary, and Indonesia were not far behind.

These were troubling times indeed. Virtually any company having its supply chains depending on the Asian market was getting the short end of the stick.

Major talks about regional supply chains versus globalization

regional supply

It was estimated that the pandemic would reshape global trade. Companies looked to reduce their dependence on Chinese manufacturing. The Economist Intelligence Unit (EIU) reported that the pandemic could “reverse globalization” by accelerating a move toward regional supply chains.

“Covid-19 will push more companies in other sectors to relocate parts of their supply chains. The outcome of this will be an Asian supply chain network that is both less China-focused and more diverse,”
the report predicted.

The world went into lockdown, and the markets were heavily affected by it. Nevertheless, necessary measures were put in place in order to revive the world economy while fighting the pandemic.

Global trade slowly recovers from the pandemic

international trade

By mid Q3, the global market was slowly getting back on its feet. Although by this time global trade was still not on par with pre-pandemic numbers it still had already recovered more than half of what it had lost.

“Global trade is rebounding much more quickly this year than it did after the 2008 financial crisis, lifting parts of the world economy and defying predictions the pandemic could send globalization into permanent retreat,”
reported Eun-Young Jeong and Tom Fairless for The Wall Street Journal.

We are still dealing with the effects of the pandemic by the time of writing this article. But, there is great news for the world: COVID-19 vaccines are well on their way. This will be a great step on ending the effects brought by the virus.

Time will tell if by the end of 2021 we’ll be remembering how a virus united the world with a single cause: the search for a cure.

Mexico is also recovering from the effects of the pandemic. Our industrial sector and economy are coming back stronger than ever. Moreover, in case of any other major contingency, Mexico is a great and strategic country to establish a regional supply chain. Thus, here at VYNMSA we would like to assist you in settling in this country.

We are one of the leading industrial real estate developers in Mexico. Plus, we have over 25 years of experience and have delivered over 400 projects to fully satisfied international clients. We are also fully equipped to assist you in developing your BTS projects. All while offering lease and sale solutions that always have a win-win approach.

We also are Broker Friendly and have around 20 inventory buildings ready for immediate occupancy. This is a total space of 1.5 million SqFt across Northeast and Central Mexico.

Contact us and set shop in Mexico with VYNMSA.

comercial@vynmsa.com

Phone: +528122028599

Sources: Global Economic Dynamics, Institute of Exports & International Trade, Euler Hermes, Steptoe, CNBC, The Wall Street Journal

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