The Impact of the COVID-19 Pandemic on Merchandise Trade in Commonwealth Countries

This paper examines how the COVID-19 pandemic has impacted merchandise trade between and with Commonwealth countries. It uses bilateral trade data from Base Analytique du Commerce International (BACI) 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 the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) in the third and fourth quarters of 2020. The simulation results suggest that Commonwealth trade will be
negatively affected, with developed Commonwealth countries being impacted more than developing countries. They also show that the adverse effects on trade will depend on the duration and severity of the disease. The analysis demonstrates the interconnected and fragile nature of the economies and highlights the need for a coordinated response for recovery.