COVID-19 hit global trade volumes less severely than feared given the depth of recessions around the world

The World Trade Organization forecasts a fall in goods trade by 9% in 2020, rebounding by 7% in 2021.4 This relative resilience is evident in businesses remaining confident about future growth, while expecting international trade to become harder.

Two-thirds (63%) of businesses believe trade has become more difficult as a result of events over the last year, but their commitment to pursuing international opportunities appears undiminished. Seven in ten firms (72%) expect their international trade prospects to be positive over the next few years, down from 81% in 2019. Only one-fifth (22%) hold a negative outlook.

  2019 2020
Positive 81% 72%
Negative 14% 22%

4 WTO: Trade shows signs of rebound from COVID-19, recovery still uncertain, October 2020

Mainland China is now the largest trading partner for Asia Pacific companies, overtaking the USA

Looking to the future: expansion markets

Europe is the most attractive region looking ahead 3-5 years (36%).

USA is the single most attractive market (13%), followed by Canada, Germany (both 10%) and mainland China / France (both 9%).

Canada USA Germany France Europe Mainland China
10% 13% 10% 9% 36% 9%

The global trade map is not being radically redrawn by COVID-19 or protectionism. Most companies do not plan to withdraw from an international market within the next two years. Rather, they are looking within their region for expansion.

The growth in regional trade is strongest in South America, where more than three in five (63%) are currently trading with Central/South America, up six percentage points on 2019. This pattern is replicated in Asia Pacific, with regional trade up by four percentage points in a year, amid a marked shift with mainland China surpassing the USA as the main foreign market for regional firms.

Percentage of businesses that think protectionism is on the increase

2017 2018 2019 2020
61% 63% 65% 64%

Around two-thirds of companies (64%) believe protectionism is growing, broadly consistent with recent years. Almost all companies fear negative consequences, including firms that operate only domestically. And these concerns run deeper than difficulties sourcing raw materials, supplier partnerships, or reaching customers overseas.

Trade fosters innovation and the exchange of ideas. Two in five firms see broader horizons and new sources of insight (37%) as a benefit, helping them enhance products and services (35%), which ultimately benefits consumer choice (34%). Businesses believe international trade promotes positive social outcomes through boosting local economies (30%) and supporting the development of local infrastructure (24%).

If you want to grow [internationally] you have to bring new ideas and new products and new innovation… We now have a joint venture with a Chinese customer in robotics and digitalisation… this company has been able to grow very fast… to be highly price competitive… to take back some market share.

Danieli Group, steel production, an Italian company operating in mainland China

Trade outlook remains positive

Percentage of companies with a positive view of trade prospects over the next 1-2 years

  Global Asia Pacific Europe North America South America
2019 81% 78% 79% 89% 87%
2020 72% 71% 67% 77% 88%

Winning strategies

Businesses fear negative impacts from growing protectionism. This perception is strongest among US and Mexican companies, rising around 10 percentage points over four years. This may reflect the domestic political environment and the desire to end trade reliance of critical goods on single foreign suppliers in the wake of COVID-19.

In response, companies are seeking to boost competitiveness (35%), partner with local firms (32%), and utilise online e-commerce platforms (29%).