Economic recovery in a post-pandemic world: it’s time to safely seize new trade opportunities 

20 July 2021

Trade, and in particular trade credit, is based on one very simple notion: trust. A supplier needs to trust that they will get paid for the goods and services they provide. Their customer, in turn, has to trust that those goods and services will be delivered on time and according to any other specifications laid out in the contract. 

If there’s a lack of trust—for example, due to uncertainty around one party’s financial situation or macroeconomic factors  such as, say, a worldwide pandemic—the system can break down. This can lead not only to loss in business between two companies but can cause a domino effect that attacks entire industries and the global economy. 

Working for a credit insurer, I view trust as an essential part of my job. I am enthusiastic about helping clients forge fruitful, new business relationships. This means giving them the confidence they need to seize the opportunities that come their way. 

After the coronavirus pandemic hit the globe last year, we saw about six to nine months of extreme uncertainty in trade, due to a lack of long-term visibility. This affected both supply and demand. Many trade partners found themselves particularly vulnerable, with disruptions on one end of the supply chain resulting in the loss of much-needed trust on the other end. The situation threatened to set off a vicious cycle of defaults, with many governments stepping in with financial support for businesses at risk. 

Now, as the global economy is picking up again, businesses must get a clear picture of the new risk profile of their potential customers. Only then can they ensure their own safe and fast economic recovery.  

The pandemic has had an unequal impact across sectors, and sometimes even within them. While industries  such as tourism and hospitality are only now gradually rebuilding, those that could digitalize quickly—such as retail—have fared better. As a result, the digital sector has flourished overall. 

The flipside of our changing patterns of consumption, of course, is global shortages of certain goods, which have had their own knock-on effects.  For example, manufacturing site shutdowns and the increased consumption of laptops and other electronic products during the pandemic have contributed to a shortage of semiconductor microchips. This continues to impact production in the automobile industry, IT and consumer electronics. But corresponding price increases are also a positive sign for players that can take advantage of it. 

Here in France, export is ramping up again, with demand for French goods expected to grow by €59 million in 2021—driven by the pharmaceutical, agri-food (with particularly high demand for wine and spirits) and chemical sectors. This would offset around 45% of the country’s export shortfall seen in 2020 .

Opportunities abound, but new risks have also emerged from this new economic landscape. That’s why it’s more important now than ever to consider the evolving patterns of consumption and how they directly affect each company on a value chain. Businesses must investigate customers beyond financial results and get a holistic picture of their situation, and that or their business partners, before entering into a partnership. 

In this brave, new world of business, how can companies know which customer to trust and which one is likely to fail? To take part in the global economic recovery, it’s essential to understand the effects of the pandemic and where we’re headed. That means not just reviewing the current financial situation of potential business partners, but also leveraging knowledge and data to get an idea of how firms will be able to get back on their feet I the near future.

This is where trade credit insurance comes in: an experienced credit insurer helps regain much-needed confidence in trade, but will also review all micro- and macroeconomic factors to provide a thorough risk assessment, and added peace of mind. 

Gabriel Prévost

Key-Accounts Team Manager, Euler Hermes France