Effects of Covid-19 on International Trade and Global Economy
Humanitarian crisis, Covid-19, effected the lives of many globally since December 2019. As of 21 September 2020, globally 31.269.019 total number of cases, 965.601 deaths and 22.851.387 recovered cases are reported. Although the death rate of this specific diseases are around 3%, the uncertainty and spread growth speed are still concerning the global authorities.
According to the recent OECD reports, unprecedented collapse on global growth is report around 13% decline in Global GDP for the first half of 2020. Furthermore, the costs of support packages to the global economy, central bank actions and fiscal policies are expected to cause more complex and long lasting affects on the global economy overall. Considering these circumstances, recession is a hot topic for many large scale economies in the World.
There is a simple equation in economy, uncertainty equals risk and risk means less motivated investors; countries, companies and individuals. With a shrinking cash flow of the world, companies are having difficult time to access to the essential resources to produce and grow. Supply and demand formulation has not been so important like this while the uncertainity backs companies off for new investments which is leading to higher unemployment rate in many countries. It is still uncertain if Covid-19 virus will spread more and force countries to apply mobility restrictions once again. On the other side, the vaccines are still on trial stages in many countries. However, recent increases in daily cases globally tell us that there is a high possibility for new restrictions by governments to keep the spread under the control in Fall 2020.
Despite the pessimistic situation of global economy, international trade must be kept flowing especially for essentials. In order to keep the trade flowing, we need cooperation and trust between all the parties involved in global trade activities. If we recall the months right before Covid-19 started, there was a high tension between large scale countries related to Global trade. The taxing and tariffs were on the table and countries were announcing new regulations against import and export procedures every day. Global economy needs this tension to be lowered and countries must rethink of their trade policies with foreign countries. Cooperation on this export and import processes will also help companies to take easier decisions and will allow the international trade activities to be less costly. On the other hand, trust means that imports do not pose health risks and will relieve the consumers to keep shopping more confidently. In the context of sever economic strain from Covid-19, it is more important than ever to avoid escalation of the current trade tensions. OECD reports suggest that there are 4 actions can be taken now to avoid the possible further damages of Covid-19 on Global Trade:
1. Boost confidence in trade and global markets by improving transparency
2. Keep Global supply chains going, especially fore essential goods and services
3. Avoid making things worse
4. Looking beyond the immediate: Policy actions now could have a long life
We are living a global economy today and Covid-19 is the single common problem of the entire world first time after many decades. We are affected together and we will only overcome this crisis if we act together with full cooperation and trust.