This page provides trend charts and forecasts on the unfolding impact of the Covid-19 pandemic on trade, capital, information, and people flows. It will be updated periodically as new data come available.
Monthly data show how trade flows plunged early in the Covid-19 pandemic and then started to recover. The following charts track changes in the value of monthly merchandise exports and imports on a seasonally adjusted basis for countries/regions adding up to about two-thirds of world trade. They are indexed to equal 1 in December 2019, before the onset of the crisis.
Full-year trade volume growth forecasts for 2020, including both goods and services, have been downgraded due to Covid-19, far outpacing 2019 downgrades driven by the US-China trade conflict. The following animated chart shows the last four IMF trade growth forecasts for 2020 and 2021, with 2018 and 2019 trade growth for reference.
The IMF forecast (June 24), used in the animation above, called for an 11.9% decline in 2020 and an 8.0% increase in 2021 in volume terms. The OECD (June 10th) analyzes scenarios with or without a second Covid-19 outbreak in late 2020. Without a second outbreak, trade falls 9.5% in 2020 and rises 6.0% in 2021. With a second outbreak, trade drops 11.4% in 2020 and rises 2.5% in 2021. The latest forecasts from the World Bank (released June 8th) call for trade to shrink 10-24% in 2021. In their base case, trade falls 13.4% in 2020 and grows 5.3% in 2021. Note that all of these forecasts cover trade volume, not trade value, which could fall more steeply because of lower commodity prices.
To provide a sense of how Covid-19 is affecting trade relative to economic output, the following charts track global trade intensity in volume terms. Since trade is expected to shrink faster than GDP, trade intensity is set to decline in 2020. However, most forecasts imply that this metric will not fall below its lowest level during the 2008-09 global financial crisis. Again, trade intensity in value terms could fall more sharply, but we focus here on trade volume to remove commodity price effects.
Capital Flows
The UN Conference on Trade and Investment (UNCTAD) forecasts a 30-40% decline in foreign direct investment (FDI) inflows in 2020. FDI flows largely reflect multinational firms buying, building, or reinvesting in operations abroad.
Focusing specifically on emerging economies, the World Bank forecasts a 20% decline in remittances sent back home by migrants living and working abroad. Meanwhile, the Institute for International Finance has also forecasted large declines in foreign portfolio investment in emerging markets.
Information Flows
Large increases in internet traffic have been recorded since the onset of the pandemic, but we do not yet have separate data available on international internet traffic. So, these data do not necessarily imply an increase in the globalization of information flows during this period.
People Flows
Airlines have reduced international capacity more sharply than domestic capacity. Recently, OAG data showed an 70% reduction in worldwide international capacity, as compared to a 30% drop in domestic capacity. In the US, the number of travelers passing through TSA security checkpoints was down 71% as of early October. This metric had been down about 96% in mid-April 2020 but has started to grow again.
Global scenario analyses for the full year of 2020 call for very steep drops in international travel. The International Civil Aviation Organization (ICAO) foresees a 44-80% drop in international air passengers, and the UN World Tourism Organization (UNWTO) anticipates a roughly 60-80% decline in international tourist arrivals across all modes of transportation. International tourist arrivals fell 97% in April 2020.
What about globalization’s prospects after the Covid-19 pandemic?
This topic is a major focus of our team’s ongoing research. For a preliminary take, refer to this May 2020 article.
