In my recent interview with Frankfurter Allgemeine Zeitung, I shared the latest insights about global services trade. Based on our newest research the “Global Services Trade Revolution”, we are forecasting global Services to contribute over 30% to global trade growth over the next 5 years. Find more details in the report here.
This article was first published in Frankfurter Allgemeine Zeitung on August 21, 2020 by Svea Junge
Permanently weak export
Companies expect a tough recovery
sju. FRANKFURT. German export companies will continue to struggle with the consequences of the corona crisis for a long time to come. “At the moment there is little hope of a really powerful upturn in international business,” said Volker Treier, head of foreign trade at the Association of German Chambers of Industry and Commerce (DIHK), in a virtual discussion with the heads of various chambers of commerce abroad on Thursday. The recovery process will be bumpy.
A recent survey by the German Chambers of Commerce Abroad (AHK) shows that 93 percent of German companies abroad do not expect an economic recovery until 2021 – or later. In addition, 83 percent of them expect a decline in sales this year, 15 percent of them at least by half.
Treier looks at the declining investments with concern. Almost half of the surveyed companies abroad are postponing planned investments or cancelling them completely due to the pandemic. This is not only slowing down corporate growth, but also the economic recovery, said Treier. He added that the coronavirus “has become related by marriage to the protectionism virus”. The trade dispute between America and China is further clouding the recovery.
While exports by German companies to China in June were already roughly on a par with the previous year, exports to America, actually the most important customer for German goods, were still down 21 percent on the previous year. “China is rather the positive exception”, said Treier. For the year as a whole, the DIHK expects German exports to fall by 15 percent overall.
A study by the payment service provider Western Union and the consulting institute Oxford Economics shows that it could be trade in services in particular that paves the way out of the crisis. The study predicts that international trade in services will increase by 31 percent in the next five years. “We believe that business-to-business, information and communication technology and financial services will be the key to getting the global economy out of the crisis faster,” said Nicole Zimmermann, head of Customer and Marketing at Western Union Business Solutions. The pandemic is paving the way for the digitization of work processes that are completely independent of geography. That is why the study also comes to the conclusion that the negative impact of the pandemic on trade in services will only be half as much as on the exchange of goods.
The crisis in the German retail sector seems to be already over. As the Federal Statistical Office announced on Thursday, retail sales in the first half of the year were a total of 0.8 percent above the pre-crisis level in the second half of 2019. But while online and mail-order business grew, clothing stores suffered sharp declines in sales.
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