Trade beyond Covid-19

20 July 2021

As the world learns to live with Covid-19 and global trade flows pick themselves up again, will there be the cooperation needed to avert ongoing trade wars and support fragile supply chains? Rebecca Harding shares her findings

It’s difficult to be precise about what happened to trade during the pandemic. On the one hand, the World Trade Organisation estimates that volumes declined by around 5.3% during the course of the pandemic, far less than was originally anticipated, and expects world trade to recover by around 8% in 2021.1

By contrast, Coriolis Technologies estimates trade values fell back by as much as 17% over the same period. This steeper drop is explained by the collapse of oil prices at the beginning of 2020, followed by deflationary pressures in the following months as lockdowns spread across the world.2

The G7 countries have all fared very differently, although the UK has come out by far the worst in terms of recovery (see Figure 1).

Figure 1: G7 changes in value of exports, May 2021 compared with December 2019 (%)

Figure 1: G7 changes in value of exports, May 2021 compared with December 2019 (%)

Source: Coriolis Technologies

Why did this happen? One explanation is that the UK has had the combined effects of the pandemic and its exit from the EU to manage and the result is a significant drop in the value of exports compared with December 2019. However, there was some stockpiling at the end of that year related to potential uncertainties as the UK started to decouple itself from the EU, and this marginally inflates the drop in values over the following 18-month period.

Compare this with Germany and China. Their export values have grown by more than 10% since December 2019 reflecting the fact that China’s growth has driven global recovery, just as its lockdown devastated inventories at the start of the pandemic. Germany’s export growth since the trade trough in May 2020 has been rapid and mostly defined by its exports to China – while trade with the US, France, the UK and the Netherland fell during 2020, trade with China grew by nearly 2%.

2020 exposed the fact that the world’s supply chains are highly dependent on China, which Covid-19 threw into sharp relief. Industrial production in China started to fall back at the outset of the pandemic as factories were closed. Shipping and ports account for around 80% of world trade and the impact on marine traffic during the first half 2020 was substantial – marine calls dropped by more than 25% between January and the end of June. This meant that containers were displaced and disruptions to supply chains inevitable.3

Semiconductor shortfalls


The latest iteration of the supply chain challenges is in semi-conductors. Yet our Coriolis Technologies data had detected a shift in the pattern of semiconductor supply chains long before the Covid pandemic. In summary:

  1. Hong Kong’s position as the largest importer of semiconductor diodes has fallen back dramatically since 2010 from US$2.3bn annually to US$0.1bn in 2020.
  2. China became the largest importer of diodes in 2018 and by the end of 2020 was importing nearly US$1bn; nearly twice the level of South Korea and the USA, which were second and third respectively. This accounted for nearly ¼ of the whole market.
  3. World trade in semiconductor diodes has fallen back from a value of US$9.39bn in 2010 to US$3.78bn in 2020. The US is the largest exporter at more than US$1bn in 2020.
  4. World trade in the types of silicon that go into semiconductors has been falling since 2018 and by 2020 was some 18% lower in value terms. China has become the major importer and the second largest exporter after Japan. The US is the third largest exporter.

However, the current shortage is affecting production and growth because of the systemic importance of semi-conductors to the manufacture of cars, computers, phones, and even the humble toaster! This particular supply chain is a microcosm of the challenges facing global trade: over-dependence on one supplier, the weaponisation of the trade flow on security grounds between the world’s largest trading nations,4 and the reliance on trade to feed rapidly growing consumer demand as lockdowns start to ease in many countries.

Stepping up to trade

So what next for trade? It is reasonable to expect that volumes will grow during 2021 and that the blockages caused by misallocated containers and factory closures will be resolved. Coriolis Technologies is forecasting that world trade growth in value terms will be around 3.5% this year while the WTO expects volumes to grow by around 8%.5 The fact that volumes are growing faster than values simply reflects the fact that the world’s trade, supply chains and inventories will be catching up during the course of the year with where they were before. Unless shortages persist, any rise in prices (i.e. values) will be moderate.

But there are bigger issues that the pandemic has also highlighted: the burgeoning gap for trade finance for smaller businesses in lower tiers of supply chains, and the sustainability of trade in the longer term, not just in terms of the environment, but also in terms of the need for transparency on human rights, working conditions and access to decent work. These are areas which may also become weaponised in the same way security concerns have been used as grounds for trade restrictions, unless there is a strong multilateral effort to work together to resolve these issues.

“Through trade, sustainability in every sense of the word can be achieved”

Trade is a means to address so many issues in economic development and international relations. Through trade,  sustainability in every sense of the word can be achieved, provided there is a common determination to make this happen. 

The second half of 2021 will show us just how strong the appetite is for placing trade at the heart of the recovery from the pandemic. This should drive the agenda for policy and business in the coming months.


1 See https://bit.ly/3hOqmnJ at wto.org/
2 See Covid-19 and commodities at flow.db.com
3 See https://bit.ly/3kxjXPz at unctad.org
4 See The Weaponization of Trade: The Great Unbalancing of Politics and Economics (2017) by Jack Harding and Rebecca Harding
5 See https://bit.ly/3hOqmnJ at wto.org/

Dr. Rebecca Harding, Independent tradeeconomist, CEO Coriolis Technologies

Dr. Rebecca Harding

Independent trade economist

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