Will supply-chain bottlenecks scupper a trade V-recovery?

While global trade continues to bounce back from the pandemic, the shape of the recovery may change as we move forward, say specialists from NatWest Markets.

Significantly, trade took just 11 months to recover from the outset of the pandemic, compared to 26 months from the beginning of the global financial crisis (GFC).

As global trade recovered from the pandemic, the East Asian economies, led by China, captured new market share, an expansion driven by work-from-home and medical products. An early lead in battling the crisis also buoyed import demand.

However, the NatWest experts stress that supply-chain disruption remains a risk. Even before the grounding of a large container ship in the Suez Canal in March, the Purchasing Managers’ Index (PMI) showed suppliers’ delivery times had dropped sharply in the US, euro area and Japan in February. In the UK, frictions in goods trade and administrative burdens are weighing on corporate supply chains, and both exports and imports declined by almost a fifth in January.

It is difficult to predict where bottlenecks will emerge as the recovery continues. Pent-up demand may outstrip supply, and corporates should strive for as much transparency of their supply chains as possible to identify risks to disruption, the experts advise. Only then will they be in a position to assess and mitigate these risks.

To read this article in full, and for more insights, visit NatWest Corporate & Institutions.

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