The Impact of COVID-19 on the Global and Intra-Commonwealth Trade in Goods.

Abstract

This paper employs the gravity model of international trade to examine the effect of the COVID- 19 pandemic on global and intra-Commonwealth trade flows. It uses bilateral monthly exports data at the HS6 level and the number of COVID-19 cases and deaths, as well as the stringency of measures taken to contain the virus, to estimate the effect of the pandemic on Commonwealth countries’ trade. The study finds that the incidence of COVID-19 in both exporting and importing countries has impacted on Commonwealth trade flows and that the extent of the effect varies with the development level of trading partners. High numbers of COVID-19 cases, including deaths, in low-income importing countries led to a reduction in Commonwealth exports, while a high inci- dence of COVID-19 in high-income importing countries led to with an increase in their exports. The incidence of COVID-19 in an exporting country was also found to impact on trade among a global sample of countries. Restrictions aiming to contain COVID-19 in high-income countries were associated with an increase in Commonwealth countries’ trade. Short-term projections of trade trends point towards a negative change in both exports and imports of Commonwealth countries. The study also proposes a set of policy options and recommendations targeting sustain- able recovery and building resilience in Commonwealth economies.