Articles

How to boost post-pandemic economic growth

September 24, 2021

The COVID-19 pandemic has had a devastating impact on the global economy. It has changed the way businesses operate, causing companies to freeze their activities and even shut their doors. Local, regional and international organisations have all had to adapt. 

So how do businesses get back on their feet? And what is the best way to achieve sustainable post-pandemic economic growth? 

 

The impact of the pandemic

The volume of world merchandise trade fell dramatically in 2020. In April last year, the World Trade Organisation estimated “world trade would fall between 13% and 32% in 2020 as the COVID-19 pandemic disrupted normal economic activity and life around the world.” While the decline might be closer to the optimistic scenario there are still major concerns. 

Increasing trade tensions in 2019 contributed to a slowdown in the global economy in 2020 with lower levels of trading activity in sectors and products affected by these tensions. 

In its 2020 report, the WTO stated that “in 2019, even before the pandemic, world merchandise trade declined in volume terms by 0.1 per cent, weighed down by political tensions and protectionist measures. In value terms, which reflect commodity price fluctuations, merchandise trade fell by 3 per cent. For comparison, merchandise trade volumes grew by 2.9 per cent in 2018”. 

However, there is cause for hope. “According to new estimates from the WTO, the volume of world merchandise trade is expected to increase by 8.0% in 2021 after having fallen 5.3% in 2020, continuing its rebound from the pandemic-induced collapse that bottomed out in the second quarter of last year”. 

But it is important to remain realistic and prepare for further harsh times. Indeed, the “relatively positive short-term outlook for global trade is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries”. 

As levels of economic misfortune fluctuate around the world, it’s time to examine how we can achieve a stable and reliable economy in a post-pandemic world. 

 

The urge to boost post-pandemic economic growth

A wide range of global organisations, institutions or other bodies are recognising the need to find ways to boost operations and contribute to modern global trade effectively. 

The WTO recently announced that the government of Finland is contributing more than a 1 million euros in 2021 and 2022, “to help developing countries and least-developed countries (LDCs) advance their expertise across various trade-related areas and ramp up their participation in multilateral trade negotiations.”

Donations will support developing countries and LDCs in complying with international food safety, animal and plant health standards so as to promote safe trade. The objective is to encourage the countries to play a more active role in international trade and to finance training activities for officials from countries that benefit from technical assistance to enhance their trading capacity. 

While the urge to boost post-pandemic economic growth is felt on a global scale, some regions will have an easier road to recovery. For example, much of global import demand will be met by Asia, exports from which are expected to grow by 8.4%. Meanwhile, South America will see weaker export growth, (3.2%) in 2021

Asia’s rapid recovery can be explained by the relatively small impact that COVID-19 had on certain Asian economies. The region has been supplying the world with consumer goods and medical supplies during the pandemic, driving up regional export totals and ensuring that their economy is able to grow. 

 

Invoice financing is the solution

Small and medium-sized enterprises, especially those based in developing countries, need a more consistent cash flow when trading internationally. This is where invoice financing can help. 

Stenn has been supporting international trade since 2015 with invoice financing services for small and medium-sized businesses in 74 countries. Stenn helps businesses connect to the global financial system and become more financially empowered. 

To assist businesses in overcoming the post-covid crisis, Stenn recently launched new fast financing programs for manufacturers and exporters in Mexico, Argentina and VietnamPrograms are supported by a pool of world-known investors with a reserve of $500m USD each and intends to help companies unfreeze working capital and avoid deferred payments with pending invoices.

 

Get financed now

 

How does invoice financing work? 

Small and medium-sized companies exporting goods overseas typically have to wait for payment for 60-120 days. This waiting period is too long and can cause cash flow problems. 

To help businesses to speed up the process, Stenn offers immediate coverage of that debt – by transferring the money to the exporter now and collecting money from the buyer at a certain time. 

This results in the exporter receiving the funds as soon as the goods are shipped (in 48 hours). Invoice financing therefore protects you from a possible non-payment. It is a reliable method to avoid your company becoming financially vulnerable. This is especially important now as businesses try to get back on the road to recovery in the wake of the pandemic. 

 

> Watch our video below to know more about what is invoice financing and how does it work!

 


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