[Interview] UNCTAD Secretary-General: "COVID-19... Trade Has Become Even More Important"

In a Written Interview, Emphasizing Medical Equipment... "Shipping Also Shows Recent Recovery"
"Digital Trade is the Driving Force Post-COVID"... Concerns Over Widening Inequality Between Countries

Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD)

[Asia Economy Reporter Jeong Hyunjin] "The COVID-19 emergency has reminded us that trade has become even more important in times of crisis."

Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) (photo), emphasized that skeptical views on international trade have disappeared in the wake of the pandemic. In a written interview with Asia Economy on the 5th, he pointed out that cross-border trade of medical equipment increased after the COVID-19 outbreak. He said, "International trade related to medical equipment necessary for COVID-19, such as masks, protective gear, and ventilators, more than doubled within just a few months after the pandemic began." He added that this was the result of governments around the world easing trade and investment-related measures following the COVID-19 crisis.

Kituyi’s interview followed his keynote speech at the 30th anniversary seminar of the Korea Institute for International Economic Policy held the previous day. In his keynote, he emphasized that COVID-19 is reshaping global production systems and that digital trade will grow significantly.

◆ "Global Trade Recovery" = In the interview, Secretary-General Kituyi assessed that global trade, which sharply contracted after COVID-19, is gradually showing signs of recovery. He explained, "The average weekly port waiting requests for shipments have begun to recover," adding, "Since 80% of global trade is conducted via shipping, this is a good sign." However, he cautioned, "The outlook (for the economy) is very uncertain and will depend on factors such as the persistence of the health crisis and the effectiveness of policy interventions to mitigate economic damage caused by the pandemic," pointing out that "geopolitical risks, financial risks, and ongoing trade tensions add to the uncertainty." UNCTAD estimates that global trade will shrink by about 20% this year and foreign direct investment (FDI) by up to 40%, with revisions expected soon to reflect recent economic indicators.

He predicted significant changes in the global production system in the 'post-COVID era.' He said, "New industrial revolutions, policy shifts toward economic nationalism, and sustainability will bring tremendous consequences for global production over the next decade," emphasizing the need to seize opportunities through these changes.

Considering UNCTAD’s main mission of supporting developing countries, he expressed concern that changes in FDI are making it difficult for developing countries. Secretary-General Kituyi said, "We are observing shorter value chains than before, higher concentration of added value, and a declining trend in investment in production assets," evaluating that "these changes have posed challenges to developing countries that have attracted FDI and participated in global value chains for decades, gradually upgrading their technologies." However, he also stressed the need to adapt to changes in the investment development paradigm, noting that "changes in global production have expanded investments seeking resilience and provided growth opportunities such as entering new markets through regional value chains and digital platforms."

◆ "Digital Trade, Growth Engine in the Post-COVID Era" = A field that Secretary-General Kituyi showed interest in is digital trade. He analyzed, "Due to COVID-19, trade in the form of e-commerce linked to domestic and cross-border transactions has increased from consumers to producers." He referred to lockdown measures implemented to curb the spread of COVID-19, which led to the expansion of e-commerce companies like Amazon. He said digital trade will be a major driving force for economic growth in the 'post-COVID era,' emphasizing that "no country should be left behind due to digital transformation," as everyone is both a digital consumer and producer.

UNCTAD is an organization established to correct trade imbalances between developed and developing countries. Secretary-General Kituyi expressed concerns about low-wage countries and developing countries, stating that the COVID-19 crisis has hit countries and people already in vulnerable conditions. He particularly mentioned the debt problems of developing countries, pointing out, "It has endangered not only low-wage countries and underdeveloped countries with already unsustainable levels of debt but also developing countries that previously maintained relatively sustainable levels of debt."