10 September 2020
ITC Describes Impact of COVID-19 Lockdown on Economies, Small Businesses
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The International Trade Centre launched an interactive online publication providing truncated highlights and customizable infographics to visualize data from the 2020 Small and Medium-sized Enterprise Competitiveness Outlook report.

The report presents findings from a global ITC Business Impact Survey that gathered evidence from over 4,400 businesses, and suggests that one in five small firms may go bankrupt within three months.

Factory shutdowns in Europe, the US, and China have impacted global supply chains, and export bans and other restrictions are estimated to cover 73% of global trade in COVID-19-related goods, but the report finds sufficient quantities of inputs to develop regional supply chains.

The International Trade Centre (ITC) has launched an interactive online publication that describes the impact of the lockdown associated with the COVID-19 pandemic response on small and medium-sized enterprises (SMEs). The report features a 15-point action plan that encourages businesses, business support organizations, and governments to prepare for a “new normal,” one where society is resilient, digital, inclusive, and sustainable.

The e-publication augments the latest iteration of the annual SME Competitiveness Outlook report published on 22 June 2020 titled, ‘COVID-19: The Great Lockdown and its Impact on Small Business.’ The e-publication provides truncated highlights from the report’s five chapters and country profiles, each accompanied by a set of infographics that readers can customize to tailor their view of the data contained within the PDF report.

The report presents findings from a global ITC Business Impact Survey that gathered evidence from over 4,400 businesses spanning 132 countries from April to June 2020. The survey results suggest that one in five small firms may go bankrupt within three months. Approximately 55% of survey respondents flag that the pandemic has “strongly affected” their business. The number rises to nearly two thirds when accounting for only micro- and small enterprises.

Countries’ responses and levels of support to small businesses have varied widely, “from almost nothing to about half of gross domestic product (GDP).” Small business survey respondents highlighted the importance of cash transfers to help them survive the crisis, whereas larger companies indicate a preference for employment protection programmes, the report notes. To keep employees working and cope with the pandemic, approximately 60% of survey respondents shifted their businesses online, changed their sourcing practices and/or adopted telework. The report finds that although smaller businesses were agile in the early days of the pandemic, larger companies have been better equipped to handle a long-term shutdown.

A press release from the report’s initial launch highlights that factory shutdowns in the EU, US, and China – which together account for 63% of world supply chain imports and 64% of exports – are expected to amount to USD 126 billion in losses in 2020. These shutdowns have significant repercussions elsewhere, the report stresses, given the global nature of supply chains. Survey respondents also reported increased difficulty accessing inputs for their respective businesses. Within the EU, the report projects a drop in intra-EU trade amounting to USD 101 billion. Looking at trade linkages across regions, more than 70% of projected losses in Africa is due to temporary disruption of the continent’s supply chain linkages with the EU.

While export bans and other restrictions put in place by 93 countries (as of May 2020) are estimated to cover 73% of global trade in COVID-19-related goods, the report underscores that “there are sufficient quantities of inputs to develop regional supply chains to meet demand for these” products. However, standards and conformity assessment bodies are necessary, and audits should be conducted where feasible, ITC emphasizes.

The report features country and territory profiles for the 85 economies for which 2019 trade data and GDP data were available. The profiles – specially designed for this edition of the Outlook – provide a detailed forecast of how the lockdowns in China, Europe, and the US will affect international supply chains. They offer an industry snapshot for each of the 85 individual economies in 2019, noting GDP composition and breakdown between agriculture, industry, and services, as well as industrial exports and imports from the calendar year. To articulate disruptions from COVID-19 within each economy, the profiles focus on industrial supply chain disruptions, projecting supply chain export and import losses by sector. The profiles also note whether the sectors within that economy feature above or below average SME presence and women employment.

To stimulate action, the e-publication and report feature a 15-point plan to support small businesses through the COVID-19 crisis, also published in an ITC publication released in May 2020 titled, ‘Supporting Small Business Through the COVID-19 Crisis and Towards the Future.’ The action plan features five recommendations for businesses, five for business support organizations, and five for governments. For each group of actors, ITC advises that they prepare an immediate response to the crisis, and “get ready for the new normal.” The report looks forward to a “new normal” characterized by four main traits: resilience; digital; inclusive; and sustainable.

The foreword by ITC Executive Director Dorothy Tembo highlights a joint effort with the UN Conference on Trade and Development (UNCTAD) and World Trade Organization (WTO) to provide a “Global Trade Helpdesk” that helps small firms assess how border closures and other measures are evolving and potentially affecting their businesses. The report also notes broader actions that the ITC has taken to support SMEs during the pandemic, including helping them move their businesses online and transition into new product lines (e.g. textile companies producing protective masks). [Publication: SME Competitiveness Outlook 2020: The Great Lockdown and its Impact on Small Business] [ITC E-publication] [Publication Landing Page]

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