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.

KEYWORDS:

• COVID-19 pandemic
• world economy
• trade performance
• disaggregation
• principal component

Subject classifications codes:

• F62

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Mui-Yin Chin

Mui-Yin Chin is a Deputy Dean cum Associate Professor of the Department of Economics and Corporate Administration, Faculty of Accountancy, Finance and Business of Tunku Abdul Rahman University of Management and Technology. She is also a Senior Research Associate at the School of Public Management, Governance and Public Policy, College of Business and Economics, University of Johannesburg, South Africa.

Sheue-Li Ong

Sheue-Li Ong is a Senior Lecturer of the Department of Economics, Faculty of Business and Economics of Universiti Malaya. She is also a Senior Research Associate at the School of Public Management, Governance and Public Policy, College of Business and Economics, University of Johannesburg, South Africa.

Lee-Peng Foo

Lee-Peng Foo is a Senior Lecturer of the Department of Economics and Corporate Administration, Faculty of Accountancy, Finance and Business of Tunku Abdul Rahman University of Management and Technology. She is also the Chairperson for Centre for Business and Policy Research.

Simba Mutsvangwa

Simba Mutsvangwa is a Lecturer in the Department of Economics, Faculty of Commerce at Bindura University of Science Education. He is also the Chairperson for the same department.