Unpacking The Resiliency Of Global Trade, Yet Again

Context: Going by past experiences and historical ruptures, there is hope for global trade recovery in the post-COVID-19 world.

Economic impact of pandemic

• Global perspective:
  • Economic contraction: In 2020, the world economy shrunk by 4.4% and global trade by 5.3%.
  • Job losses have been estimated to be to the tune of 75 million.
  • Disrupting complex cross-border supply chains: As countries have responded to pandemic-induced shortages with protectionist reactions and nationalist aspirations.
• Indian perspective:
  • GDP contracted by 7.3%, according to the National Statistical Office.
  • 10 million jobs were lost, according to the Centre for Monitoring Indian Economy.
  • Trade remained subdued: At $493 billion (goods at $290 billion and services at $203 billion).

Post-COVID world prospects

• Trade facilitation and promotion: As International trade is vital for development and prosperity, while competition is central to generating competence.
• Role of World Trade Organization: Expected to stitch trade facilitating rules with a collective resolve to discipline errant nations that are known to dumping goods and erecting trade barriers through multilateral rules.
• Rise of mutually beneficial trade arrangements: A move beyond bilateral and regional levels to create win-win situations for all stakeholders, including consumers.
• Tech future: Countries that harness technology are expected to dominate international trade in future with a transformational impact on the global economy.
• Addressing the risks associated with disruptive technological adaptations, economic policies are likely to focus on stronger safety nets for workers, which includes income protection, skill training, health care and educational support for families.

Way forward:

• Incentivise value-added manufacturing and technology-induced finished products:
  • Plug and play manufacturing units under Production Linked Incentive Scheme (PLI) schemes, if carefully nurtured, could lead the industry on that path.
• Support measures: 
  • Timely stimulus packages for MSMEs: Supporting them with cheaper input costs, including raw material and intermediate goods, would help sustain them with job creation at the local level.
  • Developing a synergistic relationship between the big industry and MSMEs: Big industry should be encouraged to move into technology space and finished products, while MSMEs feeds them with locally made inputs at competitive prices. 
  • Skills upgradation to global standards.