The Impact of COVID-19 on Trade Performance in the World Economy

Abstract

The COVID-19 pandemic significantly disrupted international economic activities. This study examines its impact on the world economy, analyzing different regions and income groups separately. The empirical findings reveal that COVID-19 had a negative and substantial impact on global trade performance. Surprisingly, high-income countries experienced a positive impact on trade due to COVID-19, showing greater adaptability and, in some cases, emerging as exporters of medicines and COVID-19-related products. In contrast, middle-income and low-income countries did not observe any significant impact on trade performance from COVID-19. This finding implies that trade deterioration during the pandemic might be attributed to mediating factors rather than the direct influence of COVID-19 itself. Furthermore, when examining the effects by region, the results are mixed, reflecting the diverse characteristics of different regions. Consequently, it becomes evident that the COVID-19 pandemic has exacerbated existing inequalities, with the trade performance of affluent and advanced countries being the least negatively affected. In conclusion, the COVID-19 pandemic had far-reaching consequences on global trade, impacting various regions and income groups differently. The study highlights the need for targeted policies to address the disparities in trade performance and foster a more resilient and equitable global economy.