On 11th March 2020; more than a year ago, the World Health Organisation (WHO) declared the outbreak of COVID-19, a pandemic. Since the first case was confirmed in late December 2019, the pandemic has spread at an alarming speed throughout world. The disease has taken the lives of 3.3 million people, as at 3rd May 2021, and about 114 million job losses in 2020, according to the International Labour Organisation. Rise in unemployment, reduction in income, disruptions in manufacturing and services are amongst the consequences of the disease mitigation measures implemented by different countries. Thus, this pandemic is far more than a health crisis, its affecting economies and societies of the world at their core. Due to the pains of the pandemic on the global economy, 2020 was declared as the worst economic downturn since the great depression.
The USA, UK, Russia, China and India are the leading manufacturers of COVID-19 vaccine. As of April 2021, about twelve different vaccines have been rolled out and vulnerable populations in all countries were the highest priority for vaccination as per WHO. Each and every country need vaccines, but not all of them are able to manufacture them, as it is a highly specialised process and subject to comparative advantages. Hence, trade has to play a vital role in distributing vaccines all over the world.
Even with high uncertainty about the path of the pandemic, rolling out the vaccine raised hopes of a turnaround. Additional fiscal support provided by some countries (e.g.: USA) further uplifted the economic outlook as illustrated in Figure 01 below. Considering all the latest developments, the International Monetary Fund (IMF) projected a strong recovery in 2021 and 2022 for the global economy after an estimated contraction of 3.3% in 2020. Accordingly, 6% growth is projected for this year and 4.4% for 2022. However, a high degree of uncertainty surrounds these projections, with many possible downside and upside risks, the IMF stated. In the medium-term, global growth is expected to moderate to 3.3%, reflecting projected damage to supply potential and forces that predate the pandemic, including aging-related slower labour force growth in some countries.
In advanced economies, occasional regional restrictions are likely to be necessary at times to stem the progression of new strains of the virus. As the vulnerable population gets vaccinated, contact-intensive activities are expected to resume and drive a significant pickup in growth thanks to pent-up demand funded by accumulated savings in 2020, the IMF stated.
In Emerging Markets and Developing Economies (EMDEs), effective protection through the vaccine will remain unavailable for most of the population in 2021. More lockdowns and containment measures are needed more frequently than in advanced countries. Recovery profiles vary, based on the regional differences in the severity of the pandemic, economic structure and the effectiveness of the policy response to combat the fallout. (Refer figure 02 and 03 below)
In advanced economies, occasional regional restrictions are likely to be necessary at times to stem the progression of new strains of the virus. As the vulnerable population gets vaccinated, contact-intensive activities are expected to resume and drive a significant pickup in growth thanks to pent-up demand funded by accumulated savings in 2020, the IMF stated.
In Emerging Markets and Developing Economies (EMDEs), effective protection through the vaccine will remain unavailable for most of the population in 2021. More lockdowns and containment measures are needed more frequently than in advanced countries. Recovery profiles vary, based on the regional differences in the severity of the pandemic, economic structure and the effectiveness of the policy response to combat the fallout.
(Refer figure 02 and 03 below)
Path of the pandemic is very uncertain and hence it is difficult to quantify the balance of risks around the outlook. Although new vaccines offer a path to recovery, uncertainty remains on the effectiveness of vaccines against new strains of the virus. Emergence of new waves in countries like India will put a dampener on growth and the uncertainty on the duration of the start-stop pattern makes outlook difficult to predict.
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One of the most important decisions that businesses have to make in International shipping relates to the selection of the mode of transport; whether to use ocean freight or air freight.
One of the most important decisions that businesses have to make in International shipping relates to the selection of the mode of transport; whether to use ocean freight or air freight.
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