Forecasting the Impact of COVID-19 on Global Trade [New Podcast]
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"It's a massive time for global trade," says Andrew Blasi Jr., director at Crowell and Moring International with a specific focus on regulatory policy and international affairs, in the latest episode of the Thomas Industry Update Podcast.
When Blasi last joined Thomas CEO, president, and host Tony Uphoff on the podcast, he spoke about the impact of the trade wars on industry. His perspectives were so insightful and constructive that we brought him back by popular demand to the podcast — this time to get his take on how COVID-19 is disrupting global trade again.
A Crisis of Global Proportions
“While we're going to talk about the economics and trade," notes Blasi at the beginning of the conversation, "it's really important not to overlook the human toll that this pandemic is inflicting."
“If you thought 2018 and 2019 trade tensions and tariffs were consequential, the current pandemic is on a completely different level. In fact, the anticipated global trade impact of the pandemic is very likely, in my view, to exceed that of the 2008 financial crisis,” warned Blasi.
He went on to say that, according to the World Trade Organization (WTO), “nearly all regions of the world will face a double-digit decline in trade volumes.” Despite the universality of the impact, he said the WTO believes Asian and North American exports will be hit the hardest.
“Because of what's essentially been a global shutdown, the more interconnected and dependent your supply chain is, the more vulnerable your business has inherently become,” Blasi said.
Forging a Way Forward
There’s no doubt that supply chains have been compromised, that there’s been an economic downturn, and that people have lost their lives due to COVID-19. With shelter-in-place mandates, businesses across the world have had to, at least temporarily, shut their doors. As these mandates are lifted, businesses are grappling with how to sanitize their facilities, implement social distancing measures in tight spaces, and deal with disruptions in the supply chain, among other issues.
“The only question we're looking at now is just how massive and, really in some ways, how quick the rebound will be. That's the only figure that really matters at this moment,” said Blasi in regard to the outlook for trade.
Indicating his predictions for how business will change post-COVID-19, he said, “I think going forward — and the trade tensions started to demonstrate the need for this before the pandemic — businesses may now need larger inventories of inputs as well as greater sourcing diversity. This could require many companies to onboard greater capital on the supply side, and it also could produce new market inefficiencies that firms are really just going to have to grapple with for some time to come.”
Additionally, he said, “We should even expect or anticipate that some countries could push to localize production in certain industries.”
Listen to Blasi's predictions on how COVID-19 will specifically impact the goods, energy, and service industries on episode 15 of the Thomas Industry Update Podcast.
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