2021 will be the year of the restart. International trade should settle at 7.6% with a further consolidation of + 5.3% in 2022, bringing the markets back to pre-pandemic levels. This is what emerges from the 18th report “Evolution of foreign trade by areas and sectors”, the guide for export companies produced by ICE Agenzia together with Prometeia.
Although 2020 ended with a -7.2% in global trade and with 90% of countries experiencing a decline in imports, the report insists on the strictly non-economic nature of the crisis which, while representing an element of profound uncertainty in the short term, once got past the health impasse (subject to the success of the vaccination campaign), should encourage a more intense recovery compared to the slow one that marked trade exchanges in 2009, in the year of the global financial crisis.
Among the G8 countries, Italy is the one that managed to contain the collapse of exports in 2020 (-9.7%) the most, also because in the second part of the year it showed an economic recovery of + 30% in the third quarter and 3.3% in the fourth. This trend was maintained at the beginning of 2021 due to the positive performance of many sectors of excellence of the Made in Italy.
The global scenario
Although the recovery in demand expected in many markets as early as 2021 will not translate into a return to the past in the strict sense, “today we face a scenario that, – declares Carlo MariaFerro, Presiident of ICE – once a ‘new normal’ in the circulation of people and goods has been re-established, looks clearer and less unfavourable”: on one side, thanks to trade policies that aim at greater openness – the reference is to Brexit which resulted in no duties, the orientation of the new American administration less inclined to protectionist pressures and the RCEP, the largest free trade agreement ever signed which kicked off during the pandemic, involving 15 Asian countries which alltogether represent 30% of the world’s population and GDP. For Italy these markets are worth a total of 39 billion euro (8% of its exports). On the other side, due to the emergence of the near-shoring trend: already concealed before the crisis, during the health emergency, the emergency reorganisation of some supply chains has intensified intra-area exchanges, opening excellent opportunities to Italian companies, already well integrated in the production chains and with an excellent competitive position on mature markets, especially in Europe.
The road map of Made in Italy’s opportunities
In 2021 there will be a widespread demand recovery at a global level which will offer Italian companies the opportunity to reposition themselves and seize new opportunities both in mature, well-controlled and in emerging, more dynamic markets. The pace of recovery will differ by area: Europe, the traditional outlet for Made in Italy, will have to wait until 2022 to recover pre-Covid demand levels. In North America, the levels of 2019 should already be reached in 2021. In mature and non-masture Asian countries, there will be an even faster and more sustained growth, with the exception of India, which is still struggling with the health emergency. The same applies to sub-Saharan Africa and Latin America, held back by a lower confidence in national health systems about the implementation of widespread vaccinations.
In any case, the expected recovery in demand in 2021 will not translate into a return to the past in the strict sense. The crisis has in fact changed the competitive factors that promote the success of companies on international markets, facilitating some sectors and penalising others. For example, as a result of the pandemic in 2020 the flows of goods connected to the emergency increased by 17%, as did pharmaceutical chemicals (+ 8%). On the other side, automotive (over -20%), mechanics (-10%) and consumer goods (Fashion System and Home System), particularly important for Italy, were penalised.
In 2021, the reshaping of the reference values that inspire purchasing behaviours will affect the growth of the sectors in a different way. The search for essentiality and well-being, but also domesticity, will favour the growth of Agri-food and Furniture (respectively by + 8.5% and + 8.4% in 2021), while the Fashion System will show a less dynamic profile: + 6.7% due to two factors. The difficult situation of many companies upstream and downstream of the supply chain, especially in the components of intermediate goods and subcontractors, which during the crisis experienced prolonged standstills due to the cancellation of entire seasons. Final demand is slowing down due to the fewer opportunities for sociability that remain in the 2021 scenario and to the lower income availability that hijacks purchases on the low price range, benefitting Asian competitors. The report indicates mature best performer markets for 2021: Spain, Greece, Australia, South Korea, United States, and emerging markets: Kazakhstan, Egypt, India, Colombia, Vietnam, Malaysia.
Turning to investment goods, the accumulated excess production capacity will slow down the growth prospects of Mechanics, the first sector for national exports will be protagonist of a rebound of + 6.8% in 2021 and a further + 5% in 2022. The markets with the greatest growth, between mature and emerging ones, are: Eastern European countries, United States, Vietnam, India, Argentina.
Key Growth Factors
In 2021 and 22, the companies that will be able to embrace the stimuli towards digitisation, sustainability and innovation, new paradigms that will guide industrial policies, post-Covid production and consumption models, will be the winners. For example, in the case of e-commerce this means going beyond putting products online, and bringing into play the warehouse management for supply speed, the organisation of assistance systems, the traceability of processes to protect customers… Sustainability includes the company’s sourcing criteria, the supply chain, waste reduction and environmental risks, ethics, etc …
In a particularly intense competitive context, our companies will have to defend and consolidate the position acquired in recent years, confirming the ability to be strategic suppliers for foreign companies and markets, thanks to the innovation and exclusivity of the products offered, especially in the case of the most traditional Made in Italy products (Fashion, Food and Home Systems), and the quality of associated services, such as timeliness and the ability to customise production, important issues for the Automotive and Mechanics sectors.
From crisis to opportunity
In a context full of unknown factors, there are also opportunities offered by the forced re-set of pre-existing balances, from which companies will be able to find new paths and development channels by relaunching “internationalisation and exports (which are already worth 1/3 of the national GDP) as a necessary condition for industrial recovery and the levels of well-being threatened by last year’s pandemic”, concludes Carlo Maria Ferro.