Trade in the Time of the COVID-19 Outbreak

Abstract

There are several predictions about the drastic fall in international trade as results of the global negative externality of ongoing pandemic Covid-19. Still we are in the middle of the crisis and do not know the exact span and scale of it. It is thus a difficult task at this moment to ascertain the trend of trade and forecast the exact level and magnitude of impacts of this major event. The impact of COVID-19 on trade has multiple dimensions through interlinked processes. Also, there are significant uncertainties regarding not just the virus itself, but its social and economic impacts as well. The uncertainties made the task of making trade and related policies extremely difficult. This note only outlines some likely impacts based on the limited information presently available on some key trade related variables, anticipating some normalcy in the post-COVID-19 scenario. However, we do not know when such normalcy may return. The coronavirus hit India in February 2020 via foreign visitors and Indian returnees from abroad. Not surprisingly, it spread from the metros and then through community transmission reached small towns. After WHO declared the virus a global pandemic in mid-March, India went into lockdown on 24 March and all businesses and industries had to close. But the virus gradually migrated to remote areas with the returning migrant workers. But it remains an open question whether the current lockdown has reduced the infection, or it would have been better to delay the lockdown after managing the movements of the migrant workers. It is also unclear if the current lockdown has been utilized to upgrade the medical infrastructure to deal with the pandemic at its peak when it arrives. The economic costs seem to be huge while the fatality is significantly low. Only time will tell if the timing and the scale of the lockdown were correct.