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Impact of COVID-19 on International Trade

Infectious diseases are illnesses caused by microscopic organisms such as bacteria, fungi, viruses, or parasites, and are transmitted from one person to another: directly (by bodily fluids and aerosols) or indirectly (through contact with an infected animal carrying a pathogenic bacterium that can infect living people). Nowadays, infectious diseases are one of the primary causes of death worldwide, accounting for a quarter to a third of all deaths (Vendrell-Herrero et al., 2020). COVID-19, a newly discovered infectious disease, became the leading cause of mortality in 2020. In January 2020, the WHO declared it a global health emergency; on March 11, the virus was formally designated as a pandemic, the highest level of a health emergency. The pandemic has shown how contagious diseases can spread quickly in open economies, threatening countries’ economic stability (Shang et al., 2021).

The pandemic has had catastrophic health and economic implications, causing enormous disruptions in people’s lives, the worldwide economy, and global trade. The year 2020 saw some of the most significant declines in trade and output levels since World War II. The cutbacks in global manufacturing output and merchandise trade over the first half of 2020 were comparable to the depths of the Global Financial Crisis (GFC). With this, policy responses are comparable in a structure of COVID-19--GFC dilemma. The overall effect remains uneven across the sectors. Services trade fell more in 2020 and has been rebounding at a slower rate than goods trade. Not unexpectedly, trade in travel and tourist services fell precipitously, while trade in digitally provided services, such as telecommunications and information technology services, increased considerably.

Some worldwide supply networks were put under strain in the early months of the pandemic owing to high demand (for personalized safety equipment, for example), but statistics suggest that some large supply chains were resistant and played a role in the economy’s recovery in late 2020. Trade in components and parts used in the production of traveler motor vehicles, for instance, lowered less speedily and made a full recovery quickly than the trade in final traveler motor vehicles, implying that in 2020, demand for motor vehicles dropped significantly while supply chain and manufacturing planners kept replacing components in the hope that demand would return soon.

Trade expanded quickly in 2021, allowing for a V-shaped restoration and compensating for some, but certainly not all of the write-offs from earlier sharp drops. “The WTO can play an important role in strengthening global supply chains and helping promote economic recovery from the COVID-19 pandemic and other global challenges,” WTO Director-General Ngozi Okonjo-Iweala stated during a virtual Global Supply Chains Forum on March 21. Total trade flows have become safely beyond pre-pandemic volumes, and trade implications across individual commodities, services, and commercial partners are very varied, putting strain on particular industries and supply chains. Significant disparities among trade partners and goods were maintained at the end of 2021, most notably a rising merchandise trade surplus in Asia and a growing merchandise trade deficit in the United States and Africa (OECD, 2022). However, still the world is now hoping for better decisions, planning, and management of global trade flows!


OECD. (2022). International trade during the COVID-19 pandemic: Big shifts and uncertainty. Organization for Economic Co-operation and Development. Available at: (Assessed on 31 August 2022).

Shang, Y., Li, H., & Zhang, R. (2021). Effects of pandemic outbreak on economies: evidence from business history context. Frontiers in Public Health, 9, 632043.

Vendrell-Herrero, F., Darko, C., & Vaillant, Y. (2020). Firm productivity and government contracts: The moderating role of corruption. Socio-Economic Planning Sciences, 100899.

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World Bank (2022). Finance for an equitable recovery (World Development Report). World Bank Group. Available at: (Assessed on 31 August 2022).

© 2022 Maria Mazhar

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