Commonwealth Countries and the COVID-19 Pandemic: Impact Analysis on Merchandise Trade
Published as Escaith, H and S Khorana (2021), ‘The Impact of the COVID-19 Pandemic on Merchandise Trade in Commonwealth Countries’, International Trade Working Paper 2021/02, Commonwealth Secretariat, London.
38 Pages Posted: 10 Jun 2021
Date Written: January 21, 2021
We examine how the COVID-19 pandemic has impacted merchandise trade between and within Commonwealth countries. It uses bilateral trade data and a demand-driven short-term gravity model to (i) estimate trade losses, i.e. variations in intra- and extra-Commonwealth trade in goods from the pre-pandemic trend, and (ii) simulate the impact of the pandemic on potential trade flows of Commonwealth countries under three scenarios: Consensus, Pessimistic and Optimistic. The scenarios are based on macroeconomic forecasts released by internaitonal organizations in the third and fourth quarters of 2020. The simulation results suggest that developed Commonwealth countries will be impacted more than developing countries. The analysis demonstrates the interconnected nature of these economies, and highlights the need for a coordinated response for recovery.
Keywords: international trade, globalization, scenario simulations, forecasts
JEL Classification: C15, F10, F17, O19
Suggested Citation: Suggested Citation