Pandemic May Shrink Global Trade, Hasten Adoption of Regional Supply Chains
After months of our personal lives shrinking to the confines of our homes, the scope of trade may diminish as well as companies turn to suppliers closer to home, according to the economists. In a recent report published by the Economist Intelligence Unit, economists predict that the pandemic will reverse globalization and hasten the push toward regional supply chains. The pandemic has shown that reliance on solely international trade partners can leave businesses vulnerable when global disruptions occur. Instead of scrambling last minute to find a different supplier or experiencing extended delays, businesses may start trading with regional suppliers from the get-go.
The coronavirus crisis will fundamentally reshape global trade as companies look to reduce their dependence on Chinese manufacturing, economists have predicted.
In a report published on Wednesday, the Economist Intelligence Unit (EIU) said the pandemic will reverse globalization by accelerating a move toward regional supply chains.
China’s dominance in international trade has grown ever since the country was accepted into the WTO in 2001. This event was credited by the EIU as sparking the latest wave of globalization, as multinationals took advantage of production and demand opportunities in the country.