COVID-19 likely to accelerate a shift in global trade relations: Moody’s
In a post-COVID world, ensuring supply security through enhanced supply chain robustness will become a key focus of governments and companies
The coronavirus pandemic may accelerate fundamental shifts in trade relationships and global supply chains said Moody’s Investors Service on Tuesday as per a report by The Financial Express.
“The pandemic will likely result in some fundamental shifts in trade relationships and supply chains globally, further hardening attitudes against globalization,” Moody’s was quoted as saying in the report.
The bond credit rating company noted that the supply chain shifts will occur in a multi-year process, particularly as China will retain several advantages over other economies as per the PTI report quoted in The Financial Express.
It further noted that some Asian countries excluding China will benefit from diversification away from China only if they have sound economic fundamentals, reliable infrastructure, and sufficient human capital stock, and low geopolitical and supply risk, said the report.
Moody’s said as the global trade system becomes more regionally focused, each major region will possibly have its own suppliers for strategically important products.
“Developing countries in Asia such as Indonesia, Cambodia, and India stand to benefit from their preferential access to the EU and US markets for certain goods under the ‘Generalized System of Preferences’ and the ‘Everything but Arms’ initiative to support low-and middle-income economies,” Moody’s was quoted in the report.
Moody’s further pointed out that in a post-COVID world, ensuring supply security through enhanced supply chain robustness will become a key focus of governments and companies. This will lead to making the global trade systems more fragmented further leading to an increase in regionally focused production, it added as per the report.