VoiceOver users please use the tab key when navigating expanded menus

AFTF 2020

The shape of post-COVID trade

The world faces a watershed moment for trade. A significant transition is underway – one that predates COVID-19 but has only strengthened since the pandemic began tearing up economic orthodoxy.

Now, the pace with which that change is moving is unprecedented. As the post-COVID recovery hastens, expect to see a fundamental shift in global supply chains, solidifying a move from a ‘just-in-time’ model to a ‘just-in-case’ approach.

This will come as broader trade shrinks, ahead of expectations of a recovery in 2021. The World Trade Organisation expects to see trade fall 9.2 per cent in calendar 2020, before rebounding to a 7.2 per cent rise in 2021.

Longer term, the impact to trade from the implications of COVID will be transformational, with a more-resilient, digitised supply chain ecosystem emerging.


The path out of crisis will not be an easy one, with the current uncertain geopolitical landscape an important factor.  Renowned political scientist and AFTF 2020 keynote speaker Ian Bremmer has described it as a world bereft of effective leadership.

The coordination of global powers seen during the global financial crisis is a far cry from the nationalistic trend we are witnessing today.

There’s still significant tail risk to economic growth which will likely continue well past this crisis. The fragmentation of the world order that exists will perhaps exacerbate that.



“As the post-COVID recovery hastens, expect to see a fundamental shift in global supply chains.”

Farhan Faruqui


A rethink in how capital and goods flow across borders is required. Traditional models will be sidelined. The management of logistical delays and ensuring financial stability of suppliers will no longer be the only factors being risk managed.  

In this new world, supply chain resilience will be critical: dual sourcing of raw materials, increasing inventory of key components, and regionalisation/near shoring of supply chain. Centralised factories half way around the world will be no more and near-shoring will become the way forward.

According to the 2020 Greenwich & Associates Trade Finance survey, just below 40 per cent of businesses are changing their supply chain strategy while the other 60 per cent are still monitoring the situation.  Similarly, a recent McKinsey report found more than 90 per cent of business leaders surveyed said issues revealed by COVID would transform supply chains.

This transformation will bring unprecedented investment in technology, in addition to the vast swathes already underway. The use of automation, data analytics, artificial intelligence and digital end-to-end planning will be integrated into the supply chain process.

The pandemic has been a significant catalyst for technological change. Innovation and investment in digital are at historic levels.

Microsoft estimates two years of progress in technology occurred in the first two months of COVID, while consulting group KPMG found businesses have been spending about $US15billion a week in tech investment as consumer preferences shifted dramatically and the work-from-home economy took off.

While major economies are contracting, technology is a fascinating counter force of growth. It’s been at the core of risk management throughout the pandemic and will continue to serve as a risk mitigant in the future. Expect technology’s role to expand into business discontinuity prediction capabilities, risk-transfer mechanisms and crisis planning.


ANZ Finance & Treasury Forum 2020

The ANZ Finance and Treasury Forum is here again.

On October 22, ANZ’s market-leading event is going virtual, featuring a host of international thought leaders who will pick apart the current themes dominating markets, analyse the outlook in an uncertain time and provide insights into a truly unprecedented era for doing business.

The ANZ Finance & Treasury Forum will look ahead to the new decade and the opportunities for senior finance and treasury professionals across Asia Pacific and beyond.

ANZ Institutional will keep you up to date in the lead up to the event. If you are yet to register, please contact your ANZ representative.


Plus one

It’s hard to have an effective conversation about supply chains without addressing China. Many are questioning China's future role in global supply chains but the truth is no company, industry or country can divorce itself entirely from China.

China’s growth will see it reach about 75 per cent of US GDP by next year. Some predict it will surpass the US GDP by 2030. With an economy of that size and scale, it's impossible for a business to say it would delist itself from China entirely.

What business can do to address uncertainty is invest in diversification. The market has already seen the beginnings of a move towards a ‘China+1’ strategy, which reduces exposure but recognises China will continue to play a role in supply, and certainly in terms of consumption.

As this diversification occurs, countries in the ASEAN region (in particular Vietnam, Thailand, Indonesia) may benefit as investment out of the US, Europe and Japan looks to shift.


It is inevitable there will be a short-term cost to this transition. The technology required alone will require increased investment. The wearer of this cost is likely to be the consumer.

How quickly the transition occurs will determine the ultimate outcome. If companies move locations, build new plants and establish a presence in different countries - even if the long-term goal is to lower costs - the short-term impact will be expensive.

This may inevitably dampen demand, which will accentuate many of the economic challenges presented by the pandemic.

Farhan Faruqui is Group Executive International at ANZ

This article is an edited version of comments delivered by Faruqui to a Bloomberg virtual event in October

The new fiscal reality

Read more

This publication is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZBGL”) in Australia. This publication is intended as thought-leadership material. It is not published with the intention of providing any direct or indirect recommendations relating to any financial product, asset class or trading strategy. The information in this publication is not intended to influence any person to make a decision in relation to a financial product or class of financial products. It is general in nature and does not take account of the circumstances of any individual or class of individuals. Nothing in this publication constitutes a recommendation, solicitation or offer by ANZBGL or its branches or subsidiaries (collectively “ANZ”) to you to acquire a product or service, or an offer by ANZ to provide you with other products or services. All information contained in this publication is based on information available at the time of publication. While this publication has been prepared in good faith, no representation, warranty, assurance or undertaking is or will be made, and no responsibility or liability is or will be accepted by ANZ in relation to the accuracy or completeness of this publication or the use of information contained in this publication. ANZ does not provide any financial, investment, legal or taxation advice in connection with this publication.