The role of global value chains in the post-pandemic recovery

The role of global value chains in the post-pandemic recovery

Who was there and what was said at the webinar organized by FeBAF – the Federation of Insurance and Finance Banks – on the financing of global value chains in the post-Covid recovery.

While there are economic forecasts that the luckiest get their hands in their hair, many open their umbrellas and prepare to restart. And someone has never stopped. This was discussed on 8 July at a webinar organized by the FeBAF – the Federation of Insurance and Finance Banks – on the financing of global value chains in the post-Covid recovery.

The pandemic crisis – indeed, as Daria Taglioni of the World Bank defined it – the "triple crisis of excess demand, collapse of demand and supply deficit" – and its relations with the globalization of production processes and their financing. The collapse of international trade induced by the pandemic has reduced production. We know that in the first four months of 2020, Italian exports fell by 18 billion, almost 12%. And in May we record a drop of a further 6.5 billion, taking into account only the extra-EU markets. Almost a third less tendentially.

In the darkest period of the pandemic, the global value chains (GVC) – the organizational processes in which the phases of the production chain are carried out by companies around the world – have stopped and this has generated a production halt. And yet, the GVCs are one of the first umbrellas available to companies, even the Italian ones who have not been discouraged even in the face of real arrests of supplies and production.

And so, Frederik Geertman – vice general manager and chief commercial officer of Ubi Banca, an institution close to the most heavily flagellated territories, such as Bergamo and Brescia – has sent encouraging signals, recalling the Italy relaunch operation which has made available 10 billion euros to finance families and businesses affected by the crisis. Not only that, on March 1 – one of the darkest moments of the epidemic – Ubi Banca opened offices in Singapore to support the internationalization of Italian companies and therefore defined – under the aegis of Sace – agreements with Chinese counterparts intended to integrate companies from the two countries in common value chains.

Speaking of Sace, messages of a certain optimism have also been endorsed by the chief economist Alessandro Terzulli, for whom next year will be decisive to evaluate the recovery of what has been lost this year. Beyond next year, it is impossible with the forecast to go without crystal balls. The medium-term uncertainty – said Emilio Rossi of Oxford Economics, accustomed to handling scenarios and numbers – is very high depending on too many variables, starting with those on the spread of infections and on the effective success of cures and vaccines undergoing experimentation.

Right now, stressed the landlord Paolo Garonna (Secretary General of FeBAF), finance – with banks that are better capitalized than the crises of the past and part of the solution and not the problem – takes on a key role for a sustainable recovery by channeling resources and save properly. In short, globalization already has many enemies and has shown many limits. But let's not throw the child with dirty water, because the data show that greater integration of global production chains is fundamental for the growth of per capita GDP and reduces inequalities between countries.

Times and ways of exiting the crisis will inevitably also depend on the quality and quantity of fiscal policies that are put in place by governments. Without forgetting what the European Union is doing, with the Brussels and Frankfurt measures.

Globalization, adelante with juicio, si puedes.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Fri, 10 Jul 2020 06:04:11 +0000.