When Trade Falls—Effects of COVID-19 and Outlook

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Trade, integral to growth and economic development, is under pressure as a result of the COVID-19 pandemic. As most countries take measures to protect their citizens from the virus, economies are suffering from resulting drops in production and consumption. This is further exacerbated as each country’s slowdown also contributes to the drop in trade, which in turn amplifies the economic challenge with cross-border demand and supply shocks. The economic pain from the virus could be especially severe in some emerging market and developing economies.

This briefing note, the first in a series of notes on trade and COVID, compiles trade related findings from over 70 “Daily News Summaries” prepared internally for IFC, as well as data sources from March 24, 2020 to August 1, 2020. The note provides an overview of this year’s multi-body trade forecasts and the extent to which those forecasts were realized as reported across various publications. It also highlights trends leading up to the pandemic and provides examples of how the pandemic is affecting trade in a few select cases. Finally, it offers a preliminary outlook on the future of trade, incorporating certain paradigm shifts that have been expedited by unique facets of the current crisis.

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