The Suez canal disruption has the potential to cost the world economy up to US$10bn in lost trade for each day that the Ever Given blocks the canal, adding to around US$230bn of supply chain disruption to trade seen since the start of this year.
The problem is that the Suez Canal blockage is the straw that breaks the camel’s back. Suppliers’ delivery times have lengthened and are now longer in Europe than during the peak of the COVID-19 pandemic in 2020. Importers have been grappling with a number of issues such as a shortage of containers and semiconductors, which are already hitting delivery of goods to consumers around the world. Second-round effects will be even more important as supplier input and possibly consumer prices increase.
Businesses in the UK have also have the added headache of disruption at key ports as the country adapts to the new reality outside the EU after the end of the transition period.
We forecast global trade to grow by 7.9% in 2021 as the world recovers from the low base of last year. A significant carry-over effect due to the recovery in late 2020 and strong January merchandise trade figures (in part due to China) are propping up our forecasts for 2021. Without this carry over effect the forecast falls to 5.4%.
Image courtesy BSI
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