Global supply and demand chain of finance and capital got severely disrupted due to the widespread attack of novel corona virus. can we consider that the global economy is heading towards a 'liquidity trap' situation? During this lockdown situation of almost all the countries of the world, would the global services and finance trade will fill the vacuum of world merchandise trade?
Dear Shaijumon C S,
When the SARS-CoV-2 (Covid-19) coronavirus pandemic appeared in March 2020, the situation on the financial markets changed significantly, there was a panic sale of shares on stock exchanges, and investment risk increased significantly. In terms of international financial markets, as in previous economic and financial crises, speculative capital was withdrawn from the emerging markets of smaller economies. Banks and investment funds operating internationally were changing the structure of their investment portfolios in foreign financial markets. In addition, international delivery logistics has changed. The changes mainly concerned shortening international supply logistics chains and increasing the scale of domestic production of components and semi-finished products necessary for the implementation of the production processes of final products. In this way, the scale of international capital flows has decreased.
Best regards,
Dariusz Prokopowicz
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