Graphs Reveal Swifter Global Trade Recovery in 2020 vs. 2008
Rebounding Trajectory of World Trade Post-COVID-19 Economic Downturn Depicted in Graphics
Take a gander at these eye-catching visuals courtesy of The Wall Street Journal. They reveal an interesting contrast in global trade recoveries post-crisis — the 2020 rebound being swifter than the one in 2008.
One graph speaks volumes, showing how global trade flows picked up steam five months into the pandemic, while it took a nine-month stroll to start recovering after the 2008 financial crisis. Another graph highlights how even amidst the pandemic, China and Vietnam saw an impressive over 10% surge in exports in 2020.
But why did this recovery occur at a faster pace in 2020 compared to 2008? Let's dive into the reasons:
- Speedy Policy Response: The 2020 pandemic prompted quick and decisive policy actions from governments and central banks worldwide. From interest rate cuts and quantitative easing to stimulus packages, these measures were executed swiftly. On the other hand, the 2008 crisis response, while significant, was more gradual and took longer to fully implement.
- Difference in Crisis Roots: Where the 2008 financial crisis stemmed from deep-seated structural issues within the financial system, the 2020 crisis was mainly a global health pandemic. This led to more direct and temporary disruptions in supply chains and trade, making for an easier recovery once lockdowns eased and production and logistics resumed.
- Digital and Technological Gains: Advances in digital technologies and supply chain management in 2020 facilitated quicker adjustments and more efficient operations. This enabled businesses to communicate and coordinate more smoothly, allowing them to adapt rapidly to changing conditions — a perk not so abundant in 2008.
- International Unity: The 2020 crisis witnessed a more coordinated international response, with efforts to sustain open trade and supply chains. Compared to the fragmented responses of 2008, this coordination played a key role in softening the blow to global trade flows.
The swift policy response, containing interest rate cuts, quantitative easing, and stimulus packages, could be a reason why the 2020 global trade recovery happened at a faster pace compared to the 2008 financial crisis. Moreover, the digital and technological gains made in 2020, such as improved supply chain management, facilitated quicker adjustments and more efficient operations across industries and finance.
