INTERNATIONAL TRADE
International Trade : Current Challenges And Opportunities
By Walter Nyabundi
The prevailing trading environment presents a rather complex picture . Though the world has successfully come out of the pandemic , issues such as the trade rivalry between the US and China , disruption of the global supply chain , the war in Ukraine , the cost-of-living crisis in different countries and the global recession are presenting new challenges . We are witnessing increasing geopolitical instability , creating increasing uncertainty for international trade and investment .
One of the lasting impacts of the pandemic that has been particularly damaging to emerging economies such as Kenya is volatility in the prices of raw materials . The revenue shortfalls and resulting budget deficits added to uncertainty , economic hardship and political instability in many economies .
We can posit that in the short term at least , political instability will continue to increase globally , with significantly greater impact on emerging markets . The drastic rise in sovereign debt across emerging markets , implies that debt restructuring is now a top priority for heavily indebted countries . However , many of these debts , particularly in Africa , are owed to Chinese entities that are unwilling to participate in multilateral restructuring mechanisms , which traditionally have been the most effective channels for debt relief in the past .
Opportunities abound though . The global political shift towards climate policy and a green recovery is already creating new jobs and trade opportunities . The global trade in services has risen and is likely to overtake goods trade exports in the next decade . This shift will largely benefit nations in the West , as the service industry is a key strength of many developed economies .
Closer home , nearshoring ( a trend already evident in Europe and North America ) is now becoming apparent in Africa . Companies have chosen to focus on their own local regional blocs and markets closer to home both for raw materials and their client base . Across the continent , there have been investments in transport where countries have greatly improved rail connectivity , making regional transit of goods easier , along with the establishment of special economic zones , helping countries to set up local production centres .
As countries across the continent look to ramp up local manufacturing of
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One of the lasting impacts of the pandemic that has been particularly damaging to emerging economies such as Kenya is volatility in the prices of raw materials . The revenue shortfalls and resulting budget deficits added to uncertainty , economic hardship and political instability in many economies .
domestically consumed products , there are also opportunities to take advantage of the forthcoming African common market to sell to a wider array of buyers . The implementation of the African Continental Free Trade Area ( AfCFTA ) - is expected to strengthen the region ’ s value chains and reduce vulnerability to external shocks , as well as enable cross-border investment in infrastructure , which will further spur regional trade .
As for the East African Community ( EAC ), most of the trade still revolves around agricultural commodities . However , the increasing value and volume of imports of gold , salt , medicaments , rolled iron , cement , kraft paper , automobiles , mineral fuel , wood products , and other manufactured goods point towards welcome progress in the area of value addition .
Walter Nyabundi is a Seasoned Social Researcher . You can commune with him on this or related matters via email at : Nyabundiw @ gmail . com .
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