COVID-19 CHANGED
1 HOW
GLOBAL TRADE FOREVER
TRADE RELATIONSHIPS & TARIFFS
2 HOW
ARE AFFECTING TRADE WORLDWIDE

3 DIGITALISATION ON TRADE
THE IMPACT OF

DE-GLOBALISATION – A NEW WAY

4 TO TRADE BUT WILL IT STICK?

From crisis to opportunity:what’s the future of trade?

How Covid-19
changed global
trade forever

February 2021

1

COVID-19 CHANGED
1 HOW
GLOBAL TRADE FOREVER

TRADE RELATIONSHIPS & TARIFFS
2 HOW
ARE AFFECTING TRADE WORLDWIDE

3 DIGITALISATION ON TRADE

This pandemic has demonstrated thatbeing agile is vital for future success.

THE IMPACT OF

4

Andreas Tesch

DE-GLOBALISATION – A NEW WAY
TO TRADE BUT WILL IT STICK?

Audience Q&A

2

Who are the winners and losers?
The big losers at the moment are poor and middle-income countries particularly
in Africa, and South Asia, including Bangladesh, India and Pakistan. Not becauseof the health emergency, but because of the economic emergency, and the inabilityof governments to act because they have little money and high levels of debt.
Professor Ian Goldin

HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

How Covid-19 changed global trade foreverAn exploration of the opportunities, challenges and trends
facing businesses during 2021 and beyond.

As part of the series From crisis to opportunity: what’s
the future of trade?, we hosted the webinar, How Covid-19
changed global trade forever, and encouraged our panel of
speakers to explore how the pandemic has impacted trade.
Introduced by Atradius CMO, Andreas Tesch and moderated
by journalist Daisy McAndrew, the panel included: Oxford
University Professor of Globalisation and Development,
Ian Goldin, Chair and CEO of Marcegaglia Holdings S.p.A,
Emma Marcegaglia, Credit Director Electrolux APAC &MEA, Johan Melander and Atradius Head of Global
Commercial Underwriting Team and Head of Underwriting
for the Netherlands, Edwin Kuhlman.
The panel discussed how Covid-19 has impacted trade.
They noted the crisis has impacted different markets andsectors in various ways and explored topics ranging fromglobalisation to sustainability. This white paper captures
the main themes and points of their discussion, andis not necessarily a reflection of the views of Atradius.
Visit the Atradius YouTube channel to access a summary
version of the webinar.

Key themes
Trade opportunities (markets)
Asian markets present strong opportunities for growth,particularly in Malaysia and Vietnam.
World’s centre of economic gravity
There has been a significant shift towards Asia in
the world’s centre of economic gravity (calculated by
global GDPs).
Trade opportunities (sectors)
Streaming services, online video conferencing andelectric vehicles were already experiencing growth; thisthen spiked during the lockdowns. For many consumers,
adoption of new technology will be permanent.
Globalisation vs de-globalisation
As individuals and companies move online to communicate,collaborate and trade, national borders become less relevant.
Sustainability
Appetite for green products and processes among
consumers and businesses accelerated during the
pandemic.

The pandemic hasn’t changed
trade forever, but it hascompressed into the space of
1-2 years, events that would havetaken 10-20 years to emerge.
Professor Ian Goldin

Supply chains
Disruptions to supply chains have caused many businesses
dependent on freight logistics to look for alternatives.
Government support
The scaling back of government Covid-19 fiscal packages
presents a heightened risk of insolvency for manybusinesses.

Audience Poll #1
LOOKING FORWARD TO POTENTIAL
BUSINESS GROWTH IN 2021 DO YOU LARGELY
FEEL POSITIVE / NEGATIVE / NEITHER?

64%
POSITIVE

23% 13%
NEITHERNEGATIVE

3HOW COVID-19 CHANGED GLOBAL TRADE FOREVERTrade opportunities: markets
2021 will see the world’s economic centre of gravity shift further towards Asia.
Acceleration of existing trends
A key phenomenon emerging out of the global pandemic
is the acceleration of existing trends. One area where
this is particularly evident is the speed in which the centreof economic gravity is moving eastwards. With the growthof Asian markets, economists predicted in 2011 that thecentre of gravity would reach somewhere between India
and China by 2050. Covid-19 has accelerated this trend,swinging the pendulum east more quickly and showing nosign of swinging back west in either the near or long term.
Resilience demonstrated by Asian economies
Factors such as East Asia’s largely successful containmentof the pandemic are impacting this shift. The region
proved relatively resilient against the pandemic due
to strict lockdown measures, large scale testing andperhaps because of the young population. Underlying
fundamentals are further driving the shift, including
more rapid economic growth. The recession in most of
the Asian economies has been less severe than in the restof the world, due to the successful containment measuresand firm fiscal and monetary policies. Both factors will
also play a role in the growth opportunities (which arereasonably good) for the region in 2021.
Opportunities for growth in Asian markets
Economic recovery has started in most Asian countries,
with underlying growth strongest in Vietnam and Malaysia.
World GDP is expected to bounce back by 4.9% in 2021,
while in Asia, economic activity is forecast to reboundabout 6.5% in 2021. With economies slowly reopening,pent up demand and a recovery in exports will stimulate
GDP growth in 2021. Regional exceptions include India
and the Philippines where the authorities have had to battle
prolonged waves of the virus.
Promising markets for 2021
Atradius economists have identified Malaysia and Vietnam
as promising markets for 2021. These are markets that

The best prospects canbe found in Asia, especiallyin Southeast Asia.
Edwin Kuhlman

are identified as having a strong pace of GDP recovery
in the wake of the Covid-19 crisis, a relatively low numberof Covid-19 cases (per 100,000 inhabitants), and stable
political and institutional conditions.
Malaysia, in particular, offers an attractive businessclimate, good quality infrastructure and skilled workforce.
The country is doing relatively well compared to the restof the region in terms of Covid-19 infection and death rates,
and it is well placed for robust GDP growth over the coming
years. Even though it was in recession in 2020, GDP growthis expected to rebound to 6.2% in 2021. The government
has announced a strong fiscal stimulus package for 2021,
with measures totalling RM 322.5 billion (EUR 65 billion).
This includes boosting spending on social sectors andinfrastructure. Given the country’s membership of ASEAN,
it benefits from strong trade links with neighbouring
countries. A relatively skilled workforce is giving the country
a strong position in medium-skilled electronic manufacturing.
Vietnam offers a similarly optimistic picture. The country
managed to avoid recession in 2020, and GDP growthis forecast to accelerate to 7.7% in 2021. It has been oneof the bright spots in the region for a while, being oneof the fastest growing ASEAN economies and a regional
outperformer for exports. Vietnam is an attractive destination
for companies that want to shift low-skilled manufacturing
out of China. Besides low wage costs, the country benefits
from participation in several trade agreements.

Audience Q&A

4What is China’s future role as a major manufacturing nation?
China has got a very bright future and is going to continue to grow. It has done
incredibly well with skilled leadership in handling the pandemic and trade,including regional trade agreements. It is moving to becoming a middleincome country, overcoming inequalities and ending poverty. It is probably
the world’s biggest economy and will increasingly exercise that role globally.
Professor Ian Goldin

HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

Our pre-event questions
We asked 3 questions in advance.
We wanted to take a quick snapshot of how businesses
around the world are faring during the pandemic.
So, as part of the registration process for this virtual
event, we asked attendees three (voluntary) questions.
The results are shown below.

HOW HAS YOUR BUSINESS BEEN AFFECTEDBY THE PANDEMIC?

20%

30%

50%

POSITIVE

STAYED THE SAMENEGATIVEHAVE YOU MADE CHANGES WITHIN YOUR BUSINESSTO SURVIVE THE PANDEMIC?

89%

9%

YES

NOT SURE

1% NO

IF ‘YES’ TO THE ABOVE, WHICH CHANGESTO YOUR BUSINESS DO YOU THINK YOU WILL KEEP
FOR THE FUTURE?

89%
HOME WORKING76%
INCREASED DIGITALISATION

51%
DIFFERENT APPROACH TO RISK ASSESSMENT

13%
DIFFERENT PRODUCTS

12%
DIFFERENT CUSTOMER BASE

11%
DIFFERENT SUPPLY CHAINS

5HOW COVID-19 CHANGED GLOBAL TRADE FOREVERTrade opportunities: sectors
Covid-19 created a clear divide between winners and losers across sectors.
Sectors hit hard by the Covid-19 economic crisis
Those hit hardest by Covid-19 restrictions include non-foodtraditional retail (i.e. retailers without an online presence),
travel, tourism and hospitality. More than 40 airlines
collapsed during 2020, and other airlines are hanging on,
propped up by government support. International tourism
rates dropped by 74% during 2020, with a loss in revenuesof USD 910 billion to USD 1.2 trillion. The fashionindustry has seen a dramatic drop in profit year-on-year,with estimates pointing to a reduction close to 90%.
Sectors experiencing growth due to Covid-19 driven changes
But this bleak picture is not the whole story. With stayat home orders enacted in markets throughout the world,
millions of people went online to work, shop, socialise
and access entertainment. As a result many businesses in
sectors such as online payments, cloud computing and homeentertainment saw significant growth in market value.

6
HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

In 2019, online shopping in the US was forecast to reach
24% by 2024. However, by July 2020, it already accounted
for 33% of total retail sales. The first six months of 2020
saw an increase in online sales equal to that of the previous
ten years.
Other sectors saw gains too, including consumer durables.
Unlike the 2008/09 recession, where consumers tightened
their belts and cut back on spending, 2020 actually saw
an increase in sales of white goods. This was particularly
true of big ticket items and products associated with healthand hygiene, such as clothes-steaming washing machines.
Perhaps after saving costs on commuting and holidays,
and after spending more time indoors, many consumers
invested in their homes. Johan Melander described thisexperience consumer durables businesses includingElectrolux, which experienced a 50% year-on-year growthfor online sales in 2020.

Accelerating trends and permanent changes
It is likely the pandemic accelerated trends that were alreadyunderway. Streaming services, online video conferencing
and electric vehicles were already experiencing growth;
this then spiked during the lockdowns. For many consumers,
adoption of new technology will be permanent. Consumers
are unlikely to return to combustion engine cars afterinvesting in an electric vehicle. Although business travel
may return once safe to do so, it is likely to be a lower
than previous levels, with businesses continuing to exploit
the money and time saving benefits of video-meetings andlarge numbers of employees have expressed an interest in
hybrid approaches to home working.
Other changes that are likely to be permanent include
development and production practices within
pharmaceuticals. The development and roll-out of thevaccines has been at a speed – and involved technologicaland medical advances – that have never been seen before.
For some businesses, 2020 represented neither the boom
nor bust seen in online retail and tourism respectively.
Telecoms, for example, largely held steady.
Mid-stream manufacturers with diversified portfolios are,in large part, emerging from the pandemic unscathed.

Roughly 1/3 of companies arebadly affected by the pandemic.
1/3 are not really hit, and theother 1/3 are truly benefiting fromthe effects of the pandemic.

Audience Q&A
Why have the countries run by women dealt so muchbetter with the pandemic? Do businesses with a morediverse representation do better than those without?
In the case of Brazil and the US, maybe there was a macho
attitude where the leaders thought they were stronger
than the problem. But it is true that some female-led
countries were like very clever mothers, looking to their
population, trying to defend their population the best
way possible. If you have a diverse board, not justgender diversity but diversity in a broader way, it
normally works better and you have greater innovation.
Emma Marcegaglia

Edwin Kuhlman

Audience Poll #2
DO YOU EXPECT THE TRENDS
AND CHANGES TO TRADE TO BE
PERMANENT OR TEMPORARY?

76%

24%

PERMANENTTEMPORARY7HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

Acceleration towards greater sustainability
A cultural values shift towards greater sustainability has
been evident during the pandemic. As with other trends
seen in the crisis, this was in evidence prior to the outbreakof Covid-19, but appears to be accelerating.
Governments are increasingly adopting climate change
measures and consumers are both demanding and buying
greener products. Sales of electric vehicles have grown,
despite a recession-charged slump in car sales. People arebuying more sustainable consumer durables for their homes.
Johan Melander described how consumers are increasingly
choosing sustainable options among the Electrolux productline and that a commitment to sustainability can be foundthroughout the business.
Businesses are also driving a green revolution. The B20
Group, the business voice of the G20, is discussing the idea

Audience Q&A

8Is recovery dependent on vaccines?
For effective vaccine deployment, it’s crucial that itis global. Because until it’s global, the virus will continue
to mutate around the world, that’s a great risk. So vaccine
nationalism is terrible for all of us.
Ian Goldin

HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

that businesses have to work together and take responsibility
for inequality and climate change. Governments andbusinesses have to collaborate and invest in technology
in order to move into a more sustainable way of working.
In addition, businesses are increasingly scrutinising their
supply chains, and choosing to partner with suppliers
that can provide better social and climate sustainability.
Emma Marcegaglia said: “This is a better thing to comeout of the pandemic. 2021 will be a year of growth formy company – and our growth will be more sustainable.”Businesses and markets that do not have the agility tomatch the speed of the sustainable agenda may be at risk.
For example, Japan is currently highly reliant on fossil
fuels and is at risk of losing trade opportunities with large
companies who are prepared to relocate in order to reduce
their carbon footprints.

De-globalisation vs globalisation: where are we heading?
Protectionism or border-free collaboration
For many commentators, Covid-19 represents significant
steps towards de-globalisation inflamed by trade wars
and increasingly nationalistic politics. They point towards
examples of re-shoring, protectionism, reduction in global
travel and steps taken towards shortening supply chains
and sourcing materials closer to home.
However, Ian Goldin, Professor of Globalisation andDevelopment at Oxford University argues that Covid-19
has accelerated globalisation. He explains that as individuals
and companies move online to communicate, collaborate
and trade, national borders become less relevant.
As virtual meetings replace physical meetings, their greater
efficiency could lead to higher levels of engagement andspeed the flow of ideas. Global media and social media
further the spread of ideas, with movements or protests
such as Black Lives Matter crossing continents rapidly.

Note: The subject of globalisation, and whether we are
currently seeing trends that indicate an increase or decreaseis such a big topic in its own right that we will explore it
in more detail during our 4th virtual panel event devoted
to this subject.

Audience Q&A
Protectionism seems to be on the rise, how does that
impact continued globalisation?
Asia will be the global leader of openness and integration.
It is so ironic that it had to be convinced to be globalised,and now it is the leader of globalisation. The US was at
the forefront and it is now the reticent partner. Africa andLatin America need globalisation more than any otherregions do, because they still have to grow. For everyone’s
sake, we need to fight for a more open global trading system.
Ian Goldin

Successful globalisation can be seen in the bio-pharma
sector where cross-border collaboration took place ata scientific level for the benefit of rapid advances in scienceand technology. Indeed the race to develop a vaccine against
Covid-19 resulted in exceptional examples of international
collaboration resulting in the development of vaccines
in six to seven months, when normally this process takes
around ten years.
Of course globalisation also presents problems. In fact
the global pandemic itself – spread as it was through global
travel along trade and tourism routes – is an example
of problems that globalisation can cause. For the Atradius
panel – as articulated in particular by Ian Goldin andEmma Marcegaglia - the answer is not to shut borders.
They argue effective protections against global threatssuch as pandemics, but also computer viruses, global
warming and conflicts, along with effective promotionof trade and the creation of decent jobs require greater
global collaboration and a more inclusive globalisation.

In a certain sense, the pandemic
has shown we need moreglobalisation, we need more
multilateral approach. Covid-19 has
shown that the only way to solve
global problems is to work together.

9

Emma Marcegaglia
HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

Pandemic-induced supply chain disruption
Shipping costs soar
Many supply chains have been disrupted during the
pandemic. This can be seen in shipping where container
pricing is soaring. Quarantines, lack of staff numbers at
ports (due to illness and self-isolation) and cancelledorders by non-essential retailers have caused chaos, frombacking-up container ships at ports, to a lack of ships where
they are needed. Businesses are looking at alternatives.
For many, just-in-time deliveries will become a thing of
the past and for others, inventories will rise. Others willsource supply chains closer to home and many will
exploit advances in automation and robotics to swap
distant cheap labour for closer-to-market manufacturing.

to protect themselves against supply chain risks moving
forward include getting closer to suppliers at every tier,with increased contact and regular risk evaluations.
Many plan to increase the quality or range of their market
intelligence and risk data, while also building in theflexibility to quickly change suppliers where needed,a technique also favoured by services providers. During the
webcast, Emma Marcegaglia explained how multinational
diversification can help with supply chain disruptions, aswell as an agile approach to manufacturing and distribution.

Restructuring of global supply chains
The pandemic has prompted discussion of re-shoring as
businesses seek to restructure their global supply chains tomake their procurement networks more resilient to shockand more sustainable. We are likely to see an increase inlocalised logistic hubs. A trend towards automation may
also result in shift in manufacturing closer to the consumer
markets.
Volatility and uncertainty in supply chains are expected tocontinue through 2021. Strategies employed by businesses

Why is trade with Asia so disrupted by a shortageof shipping containers?
The containers are in the wrong places due to tradeimbalances. There are big pileups, more than 50 container
ships waiting outside the port in LA to unload. Covid-19
related protocols in terms of handling containers, testing,staff illness are all impacting this. Prices were higher last
week (end of Jan. 2021), so we might have seen the peak.
Johan Melander

Audience Q&A

Audience Poll #3
AFTER HEARING THE PANEL’S INSIGHTSTODAY AND LOOKING AHEAD TO BUSINESSGROWTH IN 2021, DO YOU NOW FEEL
MORE POSITIVE / MORE NEGATIVE / THE SAME?

10HOW COVID-19 CHANGED GLOBAL TRADE FOREVER

57%

41%

2%

MORE POSITIVENO CHANGEMORE NEGATIVEIs global trade surviving on government support alone?
What happens when government schemes end?
Governments spent more than USD 12 trillion since March ‘20
Governments across the developed world have responded
to the economic shocks of Covid-19 with a variety of
mitigation packages. Ian Goldin notes that the pendulum
has swung back towards governments and the power ofgovernments, although global wealth inequalities meanthat about 20 men have more money than 4 billion people
and about 150 countries.
Measures range from tax cuts or deferments, to stateinsurance systems, changes to insolvency laws and grants
or loans to preserve jobs and avoid business failures.
Indications are that these schemes have been successful,with a much lower insolvency rate than was feared at the
beginning of the pandemic. Governments have spent morethan USD 12 trillion globally since March 2020 on fiscal
packages to support business, healthcare and vulnerable
populations. There has also been a positive knock-on effecton upstream suppliers located in countries with minimal
or no fiscal support. Many of these suppliers have beenable to continue trading, safe in the knowledge that theircustomer is safe from insolvency and they will be paid.

An uptick in insolvencies is expected
The scaling back of this support – which is projected totake place during 2021 as the recovery picks up – presents
heightened risks of insolvency for many businesses, withcompanies with unsustainable capital structures among
the most vulnerable. An uptick in insolvencies is expected
throughout the world during 2021.
Businesses can protect themselves against these risks bycareful credit management including: strong due diligence,
portfolio diversification, close relationships to customers
and suppliers and a good understanding of supply chain
health and, where appropriate, financial instruments suchas letters of credit, surety or credit insurance. Businesses
should also be alert to the period of recovery following
the pandemic, and build the financial buffers and working
capital to finance growth. The two years following 2008
financial crisis, for example, was a period that saw
an increase in the volume of distressed companies anddefaults.

11
HOW COVID-19 CHANGED GLOBAL TRADE FOREVERIf you’ve found this whitepaper useful, why not visit our
website www.atradius.com, where you’ll find many more
Atradius publications focusing on the global economy,
including country reports, industry analysis, advice on
credit management and essays on current business issues.
This paper captures the views of the webcast’s virtual panel
and is not necessarily a reflection of the views of Atradius.
Visit the Atradius YouTube channel to access a summary
version of the webinar.

COVID-19 CHANGED
1 HOW
GLOBAL TRADE FOREVER
TRADE RELATIONSHIPS & TARIFFS
2 HOW
ARE AFFECTING TRADE WORLDWIDE

3 DIGITALISATION ON TRADE
THE IMPACT OF

DE-GLOBALISATION – A NEW WAY

4 TO TRADE BUT WILL IT STICK?

Andreas Tesch
Atradius CMO
Daisy McAndrew
Moderator / Journalist
Ian Goldin
Oxford University Professor of
Globalisation and Development
Emma Marcegaglia
Chair and CEO of Marcegaglia Holdings S.p.A
Johan Melander
Credit Director Electrolux APAC & MEA
Edwin Kuhlman
Atradius Head of Global Commercial
Underwriting Team and Head ofUnderwriting for the Netherlands

Connect with
Atradius on social media
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Copyright © Atradius N.V. 2021
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or similar damages, even if advised of the possibility of such damages. Sources include: Event panellists, Atradius
economists, McKinsey & Co, The United Nations World Tourism Organization and the travel data company, Cirium.

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