Globalisation and international trading have been the major contributing factors for economic development in countries all over the world. However, the COVID-19 pandemic has cost the trading industry a major setback. As the virus is spreading across nations and more and more people are getting infected, the governments are increasing the containment zones and restricting trade at a global level.
According to OECD Economic Outlook, the global GDP has fallen by almost 13% because of a decline in global trade opportunities. Another reason for this decline in the trade opportunities could be that the governments are now focussing on supplying the essential goods only and that too with restrictions and strict policies. Also, there is a consistent shift in the demand and supply chains as people are not likely to shop for any other items except the essentials.
Effects on the supply and demand capacity
It has been found that apart from health supplies, the demands of other commodities have reduced for instance, in sectors like manufacturing. There have been direct supply disruptions from East Asia. In the areas where the pandemic has not affected much, the traders are finding it hard or more expensive to carry forward International trades.
Steve, an assignment help expert of economics, told us that people’s needs have altered at this time. They are cutting down expenses and focusing on what’s needed, whether it be households or businesses. There are delays recorded in making purchases by the customers and investments from the firms. At some places, there are severe declines in demands due to recession (people are losing jobs and finding another job is getting harder).
Another major effect of the pandemic on international trade is the increasing prices. As the demands are low and travel restrictions are more, the prices of internally traded commodities are increasing. This also implies essential goods whose demands are at a surge these days. At places where there is a shortage of supplies, because of travel restrictions across countries, prices of essential commodities are also rising.
You might have noticed that as the pandemic reached its peak, there was a severe shortage of medical masks. Even if they were being sold in the market, they had a high price due to more demand and less supply.
Impact on trades by numbers
According to UNCTAD (United Nations Conference on Trade and Development), some of the most impacted economies due to the coronavirus pandemic are European Union with an impact of 15.6 Billion USD and the United States with an impact of 5.8 Billion USD.
Olivia, an economics expert who offers assignment help in Australia to university students told us that researchers have also found that there has been a supply shock due to low employment rates during the pandemic. The cost of international trade is surging high. International tourism has also taken a steep low in 2020.
Services like public transport, restaurants and dining, domestic tourism and recreational activities have seen a steep low as people are avoiding crowded places. Such effects could be recorded all across the pandemic-affected countries.
Actions that could be taken now to improve the international trade situation
Let’s not make the situation worse
There are certain costs associated with the outbreak of the COVID-19 pandemic but we must not escalate the problems further. For instance, governments can try to avoid restrictions on the transportation of goods like food products and other essential items.
This way, countries that are largely dependent on international supplies would be able to survive in the pandemic. In any case, if people would get a signal that the supplies are cut-off, they might start hoarding stuff and begin panic buying. All this would then just multiply the problems.
Similarly, we need to ensure a consistent medical supply from countries that are creating them to those who do not have the resources to create their medical emergency equipment. Not every country has big health budget to invest in and that is why trade is essential between countries at this time.
Need for transparency
In these uncertain times, the governments of the whole world must stand up and act together. There is a need for transparency between the nations regarding their travel and trade policies. The World Trade Organisation or WTO should be notified regarding any changes being made or any restrictions being put over international trade by any nation.
Sharing up-to-date information about the market conditions would also make it easier for the WTO to advise a nation on international trade matters. Even if a country is lifting any restrictions they must notify the same so that there is no confusion amongst the local people, national and international suppliers or buyers.
Policy actions should be taken by governments
The governments of every nation that is hit by the pandemic are performing the best already, whether it be providing the essential items to the people or ensuring that proper measures are being taken to prevent the spread of the virus. However, their support is highly required in matters of trade now.
They need to consider how to keep the international trades flowing. They need to cut off tariffs on international goods, especially the ones related to medical and health. They must address the needs of each other without being biased or discriminatory. They must come up with policies that can support global trade so that economies can boost up and eventually the GDPs can rise.
Keep the supply chain going
Carl, a research expert at GoDissertationHelp told us how keeping up supply chains can ensure better international trades and rising GDPs. Carl said that OECD suggests another way to ensure that the international trade is being carried over and that is by keeping the supply chains going.
For instance, when the international flights got cancelled, there were restrictions on the delivery of air cargo as well. The prices of air cargo that’s why rose high and it even caused a delay in delivering the goods.
Along with the increased costs of cargo, the costs of labour also increased because strict precautionary measures that needed to be taken. Less number of workers were being allowed to work together at one time. All of this led to a further cost increase in international trade.
Therefore, there is a need to ensure that no barriers stop international trading. For instance, countries might speed-up border checks to avoid delivery delays. The border check processes must be more digitised to avoid human interaction. Governments must encourage e-commerce, e-signatures and e-contracts so that trading could be done without the need for human interaction.
The pandemic has hit different countries at a different level. No matter how much help is required by a nation, encouraging international trade despite the pandemic situation can ensure a sustainable economic recovery of a country. The governments all across the world should follow an action plan to keep trade flowing. This includes:
ensuring transparency in their trading policies,
enabling the supply of essential items without any delays,
relieving barriers on trade to worsen the situations further and,
last, but not the least, taking policy actions by visualising the future of their nation and the global trade scenarios.