International trade impacts of the Coronavirus
The coronavirus has been having an adverse effect on the world in a plethora of ways for a few months now. As a firm that creates global trade management software, we wanted to take a look at what the impacts have been on international trade due to COVID-19.
Restricting international trade of PPE
Countries keeping all the personal protective equipment that their nation manufactured is one of the things that has negatively impacted global trade in this pandemic. This began in January, in Asia, where the virus is thought to have originated. Countries such as Taiwan and Korea were very quick to ban exports of their PPE. The argument that the countries often have is that they need to keep their own country safe first. They believe that the priority is to look after their medical staff and the people in their home nation that are struggling with the virus. The issue arises in the fact that some countries cannot produce the PPE at a fast enough rate to deal with the amount they need, so if exporting is banned, certain countries are left with far less protection than they need. This leads to nurses, doctors and medical staff, treating people with COVID-19 without proper protection, which of course means that they are much more likely to catch the virus, and the numbers rise, meaning we are left with less people to treat the sick.
This actually happened to the UK at one point during this pandemic. A company in France that was producing masks, entered into an export contract with the UK and they planned to deliver a huge amount of masks, which the UK was lacking in. The French government then introduced the legislation that any equipment produced in a factory in France must be sold to the French government, so the export contract was not valid, and the company had to tell the UK that they could no longer deliver the millions of masks that they required. This is a big blow to the health services in England, and is a direct impact that the Coronavirus has had on global trade. There have also been similar rules implemented across Europe, including in the Czech Republic and Germany. Most of the above mishaps happened in March, and there was then a rule introduced that basically states that the EU are allowing the buying and selling of PPE to members within the EU, but not outside of it.
Countries banning global trade of food supplies
Just like the restrictions we’ve spoken about on PPE, lots of countries also banned the export of food to other countries. This is of course something that could cause big issues, particularly in countries that cannot produce certain types of food. Some of the examples of countries that banned export of food during the pandemic are as follows:
- Kazakhstan, one of the world’s largest suppliers of wheat flour. Also carrots, potatoes and sugar
- Serbia, a large exporter of sunflower oil.
- Vietnam, at one point banned any exporting of rice.
I’m sure that this is no surprise to people, as we have all seen the impact that this virus has had on food a lot closer to home. With many people across the UK hoarding food and panic buying, it just shows how people are concerned that they need to look after their people, which is the same case for countries. They believe that they need to ensure that they have ample supplies of food in order to look after the people of their nation. The worry is, that if governments do not work together to overcome the virus and ensure that all countries have enough food, equipment and medicine, then the problems may just become worse world wide.
International trade is vital to keeping the world running and the negative impacts that the coronavirus has had on trade can be seen by all.
The cancellation of flights across the world and shortages of staff in normal shipping industries has of course had a bad impact on global trade and on the world generally. This has of course meant shortages of staff on cargo ships and flights, both of which are a huge part of global trade for a lot of things, such as foodstuffs, raw materials and manufacturing. This means that there is more strain on things such as ocean container shipping, and the delivery of certain things is not as spread out. Back in April, economists at the World Trade Organisation predicted that world merchandise trade volumes will fall between 13-32%, this really shows the huge impact that this pandemic is having in the world of trade.
This lack of flights also bears bad news on countries in a different way – the lack of tourism. Many countries in the world, or particular regions of them, rely so heavily on tourism, that the lack of flights will harm their economy hugely. There is a worry that restaurants, bars and amusements in countries across the world could fail, due to the inability to hold up without the influx of tourism that they normally have. This isn’t global trade by definition, but it certainly shows the impact the COVID-19 has across the world, in varying economies. With Matt Hancock stating that summer holidays will likely be cancelled in 2020, this is a worrying thought for many tourist-heavy countries.
Alistair Hardie of ManSys said:
“At ManSys we have watched our clients dealing with the impacts of coronavirus. Most notably, traditional supply chains have been interrupted and buyers have been seeking alternative suppliers, often preferring more local ones. We will be providing trade intelligence to assist our clients in more readily identifying the pool of relevant potential suppliers they can call on.“
Some Good News!
Something that you need to remember in the midst of all the social distancing and lockdown epidemic that we are currently in, people still need things provided by trade. This therefore means that trade will still inevitably happen, because it has to. Some countries cannot produce enough of the things that they need, which of course is why international trade exists, so throughout this pandemic, we know that trade will continue and that countries should still be getting enough of what they need, even though there has most certainly been an impact on international trade and economies across the globe. The more worrying factor to take into consideration is not that we can’t trade, it’s that we can’t produce. Hopefully this does not come into play, but the worry is that the world cannot produce enough of things we need due to the massive lock down and lack of work. It’s also important to remember that a lot of information is speculation and guesswork, as this pandemic is so unheard of to this scale, so nobody is very sure how things will pan out. But, we are experts in global trade and global trade software, so we are always happy to take questions from you and try and give you a helping hand. Just contact us here.