Present state of global trade in the context of Covid-19 pandemic.

A novel virus that had initially created an atmosphere of panic in the beginning of 2020, in
China, holds the entire world hostage even after 1.5 years of accumulated global efforts.
Although having begun as a health crisis in a single country; COVID 19 soon spread around
the world using the most common trade routes owing to globalisation. And ironically, its
impact on world trade has been as hard hitting as its impact on the human body.

As compared to the first quarter of 2020, global visible trade fell by almost 15% due to the
pandemic and continued to fall further in the second quarter of 2020. This was a very unique
economic shock that the entire world faced simultaneously for the first time. Usually, a shock
of such nature is caused by the plummet or skyrocket of one of the two mechanisms of an
economy; demand and supply. However, COVID 19 caused both a shortage in demand and
supply virtually at the same time and all over the world. By April 2020, more than 75
countries had imposed new trade restrictions and prohibitions as an initial reaction to the
pandemic. The highly contagious novelty virus caused demand for most goods and services
to drop sharply. A world that was built on an efficient trade regime on high interdependence
boosted by just in time manufacturing was now bombarded by restrictions on export which
meant - a significant drop in supply. Alongside, shortage of human resource, barriers facing
transportation and temporary or permanent haul on overseas delivery, only exacerbated the
issue. A large number of local products that previously depended on imported raw materials
also faced indefinite halt in production.

The aforementioned incidents that resulted in a record high fall in global trade not only meant
losses and plummets in revenue for entire industries; but also manifested as loss of jobs and
income of the labour force engaged in the entire supply chain and at the same time meant
huge government budget cuts due to drastic fall in tariffs, customs and other forms of taxes.
Such scenarios forced many governments to look for financial assistance from other places
such as international financial institutions, development banks and even developed countries.
A majority of countries of South America, South Asia and Africa, who were already very
reliant on foreign aid and imports from the developed nations, now found the gap of
inequality in terms of power and income worsening.

Although China and its neighboring countries were impacted the most initially, by fall of
2020 they had managed to quite successfully bring down the number of cases and with it, the
chaos that it caused. With the mass production and immunization campaigns of the COVID
19 vaccine worldwide since the beginning of 2021, things have been seriously looking up for
international trade. Most developed countries started recovering by the end of 2020, and
during the first quarter of 2021 even exhibited growth in trade of goods to be higher than pre
pandemic levels. This was largely due to the baseline of trade being so low during 2020.
Currently, countries which have been the mass supplier and producer of medical equipment,
garments (PPE) and the vaccine itself, have shown the most growth since they could supply
to the world with little or no trade restrictions. And this helped to boost some large
economies such as China.
But with borders still closed without a few exceptions, trade of services faces a prolonged,
worse fate. And with the introduction of various other strains of the virus, many nations are
still going through new waves and much brutal lockdowns. In recent times, the most hard hit
by the new waves have been countries of Southeast Asia, South America and Africa.
Therefore, recovery of international trade at the present is still unstable. Forecast for the
second half of this year is expecting an overall 16% of growth from the slump of 2020. It can
be estimated that this growth will largely occur for necessities given the current levels of
employment and global recession. And regardless of what follows, what is certain for the
present, is a world much more divided by income inequality, political disparity, a huge dip in
trade in general with trade in service being hit the hardest; alongside, a plunge in poverty at
an estimate of 88 to 115 million people because of the pandemic.

Sources:

https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm

https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(20)30291-6/fulltext#seccestitle70

https://unctad.org/news/global-trades-recovery-covid-19-crisis-hits-record-high