Every global economic crisis brings about a decline in global trade. Every crisis, however, is different. While trade costs, in the form of sweeping protectionism, played a leading role in the sharp contraction in world trade during the Great Depression of 1929 and the 1930’s, they played only a small role in the great trade collapse of 2009, which was primarily about a steep fall in aggregate demand. Governments around the world have responded to the COVID-19 health crisis by imposing mitigation measures that have paralysed, or at least sharply curtailed, many sectors of the economy. Social distancing, quarantine, lockdowns and travel restrictions have become unavoidable measures in the fight against the pandemic. Even jurisdictions with relatively relaxed official restrictions on social and business activity have seen sharp declines in economic output, as individuals change their behaviour to try not to catch the virus. This note uses insights from an ongoing WTO trade costs project and available real-time indicators to outline how the reactions to the COVID-19 pandemic may affect trade costs.
trade_costs_report_eTo view the original report, click here.