JOIN USCoronavirus will lead to realignment of globalisation: WTO chief economist
The ongoing crisis vis-a-vis COVID-19 pandemic will lead to realignment of globalisation rather than de-globalisation and would see near-shoring and companies will diversify their supply chain away from China, according to Dr. Robert Koopman, Chief Economist, World Trade Organization.
Manufacturers will rethink just-in-time inventory and increase their inventory carry and will also increasingly adopt digitisation and automation, he said while addressing a webinar on impact of COVID-19 on trade and industry.
The webinar was organised by All India Association of Industries (AIAI) and MVIRDC World Trade Center Mumbai.
Dr Koopman suggested that India should take proactive steps to benefit from the realignment of global supply chain in the post-COVID-19 period.
In order to benefit from this global realignment, Dr Koopman suggests Indian government to keep its supply chain moving, facilitate trade finance, attract FDI and support MSMEs.
WTO expects the COVID-19 crisis to reduce India’s GDP growth by 5.4 per cent from the expect growth of around 6 per cent in 2020 under optimistic scenario. However, the economy is expected to recover in 2021 depending on the evolving scenario of the pandemic.
Dr Koopman warned countries against taking protectionist measures as these actions will trigger retaliation from trade partners and hurt global investment.
He informed that 80 countries have imposed export restrictions amidst COVID-19 crisis to increase domestic supply of medical goods.
Protectionist measures will increase cost of trading, which will in turn reduce world GDP growth and exports between 16-34 per cent under various scenarios, Dr Koopman warned.
Trade cost in India has increased by 3.5 per cent due to disruption in supply chain amidst this pandemic and increase in protectionist measures, Dr Koopman informed.