Page 25 - Logistics News - December 2021

EULER HERMES REPORT

SA to see rise in exports: 2021-2023

Global supply chain disruptions could remain high until H2 2022 amid renewed COVID-19 outbreaks around
the world, China’s sustained zero-Covid policy and demand and logistic volatility during Chinese New Year,
according to Euler Hermes’ Global Trade Report. Nevertheless, the trade credit insurer expects trade growth
to remain strong through 2022 and 2023, with some clear winners across regions and sectors.

fter exceptionally strong performance since H2 Yet, reshoring and nearshoring will remain more talk
2020, global trade of goods contracted in Q3, than walk. Despite the ongoing global supply chain disruption,
Aespecially in advanced and emerging economies. Euler Hermes finds no clear trend of reshoring or nearshoring
However, advanced economies are suffering more from of industrial activities so far. The only exception is the UK,
supply chain bottlenecks rather than trouble with demand: which is likely to have faced disruptions due to Brexit. However,
Euler Hermes finds that production shortfalls are behind protectionism reached a record high in 2021 and should remain
75 percent of the current contraction in global volume of elevated, mainly in the form of non-tariff trade barriers (e.g.
trade, with the rest explained by transport delays. Looking subsidies, industrial policies).
ahead, rapidly growing orders for new transportation
capacity should turn operational towards the end of 2022, Overall, global trade will grow by +5.4 percent in 2022
while increased spending on port infrastructure in the US and +4.0 percent in 2023. While there is a risk of a double
should significantly ease global shipping bottlenecks. dip in Q1 2022, Euler Hermes expects a normalisation of
international trade flows in volume from H2 2022, driven by
SA to see a rise in exports: After losing nearly US$15 billion three factors:
in 2020 versus 2019 (in goods and services), South Africa • A cooling down of consumer spending on durable goods, given
should see exports rise by US$+22 billion in 2021, US$+5 their longer replacement cycle and the shift towards more
billion in 2022 and US$+2 billion in 2023. This brings total sustainable consumption behaviours.
South African exports in value terms above the pre-crisis level • Less acute input shortages as inventories have returned to or
as soon as in 2021. Sectors that should exhibit the largest even exceeded pre-crisis levels in most sectors, and capex has
export gains in 2022 and 2023 are services, metals and increased (mainly in the US).
automotives. In terms of target markets, the largest export • Reduced shipping congestions (global orders for new container
gains should be derived from China, the US and Germany. ships have reached record highs over the past few months,
amounting to 6.4 percent of the existing fleet) and the planned
When it comes to inputs from China, Europe is losing the US$17 billion spending on port infrastructure in the US.
tug of war against the US: Europe is more at risk compared
to the US when it comes to the heavy reliance on intermediate “However, this growth comes at the expense of increased
inputs from abroad. Without production capacity increases global imbalances. The US will register record high trade
and investments in port infrastructure, the normalisation of deficits (around US$1.3 trillion in 2022-2023), mirrored by a
supply bottlenecks in Europe could be delayed beyond 2022 if record high trade surplus in China (US$760 billion on average).
demand remains above potential. Euler Hermes finds that the Meanwhile the Eurozone will also see higher than average
household equipment, consumer electronics, automotive and surplus of around US$330 billion,” explains Françoise Huang,
machinery and equipment sectors are most vulnerable to input Senior Economist for Asia-Pacific at Euler Hermes.
shortages.
And the winners are…
“China is a key downside risk for Europe: we estimate Euler Hermes estimates that the energy, electronics and
that a 10 percent drop in EU imports from China could machinery and equipment sectors should continue to
be a drag of more than -6 percent on the metal sector, outperform in 2022. But the main export winner globally
more than -3 percent on the automotive sector and more in 2023 should be automotive, thanks to the backlog of
than -1 percent on computer and electronics,” says Ano work and lower capex in 2021. At the regional level, Asia- L O GI S T I CS NEWS
Kuhanathan, Senior Sector Advisor at Euler Hermes, which Pacific should continue to be the main export winner in
operates through the Allianz Global Corporate & Specialty the coming few years (over US$3 trillion in export gains in
(AGCS) licence in South Africa. 2021-2023). •

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