Two-speed recovery in services trade expected: HSBC

THE Covid-19 pandemic will lead to a two-speed recovery in services trade, whereby international travel is likely to remain largely suppressed due to travel restrictions, while digital services may recover more quickly, said HSBC trade economist Shanella Rajanayagam in a report.

However, growth in digital services is unlikely to fully offset the collapse in travel in the near term. This suggests that services trade is likely to remain well down on pre-pandemic levels for some time to come, for most economies. On the other hand, digitally-enabled and R&D services could see a post-Covid boost, as businesses look to build resilience into supply chains and reshore some production from overseas.

Tackling barriers to digital trade and improving digital infrastructure will help support greater digital flows across borders, and could help speed up the recovery in global services trade, she said.