




































             American International Journal of Business and Management Studies  

Vol. 3, No. 1; 2021 

ISSN 2641-4937   E-ISSN 2641-4953 

Published by American Center of Science and Education, USA 

 

12 

WORLD TRADE AFTER COVID-19 PANDEMIC SHOCK – 

RECOVERY OR STAGNATION? 
 

 

Marzina Akhter 

Student of MA in Global Trade Management 

 Worms University of Applied Sciences, Germany 

MBA & BBA in Accounting & Information Systems, Comilla University, Bangladesh   

E-mail: morzina.cou1@gmail.com 

 

 

Received: August 08, 2021   Accepted: August 29, 2021   Online Published: September 26, 2021  

 

DOI: 10.46545/aijbms.v3i1.205                            URL: https://doi.org/10.46545/ aijbms.v3i1.205 

 

 

ABSTRACT 

Globalization has shorten the world & make the life easier. It also results liberalization of trade. 

Hence, world trade or global trade acts as a coordinator of foreign trade of different countries. 

Due to the behavioral and structural position, world trade is also responsible for spreading crises 

and infectious diseases. Nowadays the world is facing a perilous situation for worldwide spreading 

of COVID-19 pandemic. The acceleration of this pandemic causes the deceleration of the normal 

life of the nations. The leaders of most of the countries implement restrictive policies to protect 

their citizens from this pandemic, i.e., lockdown, travel restrictions. Consequently, COVID-19 

produces an economic impact through the interruptions of personal income, world trade, and 

demand & supply chain. After the last financial crisis 2008-09, the world is again facing a 

destructive fall in world trade. The aim of this paper is to provide an overview of world trade 

during COVID-19 and the present situation of this whether it is in stagnation or recovery. The 

paper uses secondary data from different journals, websites, newspapers and blogs for analysis 

purposes. This paper concludes that the world merchandise trade’s recovery is stronger than the 

world services trade. The reasons for sluggish world services trade is the restricted international 

travels & tourisms. There is no equal merchandise trade recovery for all the countries. Some 

countries are winners & some are losers.  

 

Keywords: World trade, COVID-19, financial crisis, Globalization. 

 

JEL Classification Codes: F10, F60, G01. 

 

INTRODUCTION 

World trade gives a platform to the countries to exchange their goods and services. The countries 

can avail themselves of getting products or services which are costly or not available to them 

domestically. When a person can buy five different products originally produced by five different 

countries from a super shop, he is taking advantage of world trade. So, trade acts as a hub of 

making connections between countries (Koka, Prescott, & Madhavan, 1999). Trade is an important 

part of growth & a fundamental portion of human social organization. After the Second World 

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War, the management process of social, political and economic factors recognized globalization 

which includes controlling of capital flow and liberalization of trade (Khan, 2020; Serrano & 

Boguñá, 2003). Consequently, this liberalization strategy has made the world smaller like a village. 

The most recent COVID-19 has emerged from China in December 2019 and spreads as a pandemic 

to all over the world. As of May 1, more than 153 million people confirmed the covid-19 cases 

and 3.2 million people have died due to this cause. This pandemic has caused a long-term 

imbalance across income groups & discontinued availability of essential medicine and health 

services (World Health Statistics, 2021). It is not only a health disease but also affects the world 

economically, politically, socially, psychologically, and educationally. This causes a de-

globalization with a shock in educational, tourism, investment and export & import sectors 

(HASSANI & DOST, 2020). Foe instances, most of the countries in the world have physically 

closed their educational institutions to reduce the spreading of this pandemic (Salik & Chowdhury, 

2020). In the business organization rewards and recognition policies are important for employee 

engagement (Baqir, Hussain, Waseem, & Islam, 2020). Due to this pandemic period companies 

fail to manage this. Most of the cases they choose retrenching of the employees. There is an 

unusual economic ramifications and employees are losing their jobs (Imran & Ahmed, 2020). 

World trade is also hampered by this pandemic. Globalized world trade (moving plants, animals 

and other materials) is also responsible for spreading infectious disease (Relman, Choffnes, & 

Mack, 2010). Due to this structure of the world trade system, it is not only a channel of exchanging 

goods and services but also can be a channel of spreading crises (Glick & Rose, 1999). For 

instance, the impact of this pandemic on trade has not just confined to one or two countries rather 

it spreads all over the world. As the third wave of COVID-19 has started, this pandemic situation 

is continuing for a long time. The world is searching for solutions to retrieve from this. So, what 

is the recent development in world trade after this pandemic shock? Is it recovering or in a 

stagnation situation? The aim of this study is to find out the answers of these questions. The 

analysis of this study is based on the secondary data. The data are collected from journals, 

published research articles, websites, blogs etc.  

 

OVERVIEW OF WORLD TRADE 

As the concept of David Ricardo, global trade or world trade can be recognized as a comparative 

advantage. A country can be in a comparative advantage position by making a specific goods or 

giving services at a lower cost than other countries (Ruffin, 2002). For instance, the garment 

industry of Bangladesh is in a comparative advantage position due to its lower labor costs. Hence, 

World trade collaborates the specialization of different countries and makes an exchanging 

platform among these countries. The World Trade Organization (WTO) acts as a media of setting 

rules and regulations for world trade. Its aim is to help the nations doing their trade in a flexible, 

free and easier way. Since 29th July 2016, it has 164 members and most of the trades have taken 

place under the rules and regulations of world trade. According to the former Director-General 

Roberto Azevêdo of the WTO, in 2016, 98 percent of world merchandise trade occurred under 

WTO rules. World trade can play a vital role to accelerate national development, economic growth 

and job creation. In 2017, world merchandise recorded its highest growth in the last six years, the 

ratio of trade growth to GDP growth returned to 1.5, above the 1.0 ratio recorded in the years 

following the 2008 financial crisis. Further, according to the Statistical Review Report 2019 of the 

WTO, the volume of world merchandise trade as measured by the average exports and imports, 

increased by 3% in 2018. Developing economies also exported a total of US$ 8,779 billion in 2018 

of which US$ 193 billion dollars were from least-developed countries. In summary, world trade 

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& GDP grew by 26% since 2008. World trade has been in a positive trend since the 1950s and 

from 1980-2002, it has tripled (Ortiz-Ospina, Beltekian, & Roser, 2018; Barriel & Dean, 2005). 

Additionally, according to the Statistical Review Report 2020 of the WTO, in 2019 before the 

covid-19 pandemic situation the world trade declined in volume by 0.1% and merchandise trade 

fell by 3% due to political tensions and protectionist measures. So, the average trend of world trade 

before covid-19 is upward with exceptions in some cases. 

 

World trade during COVID-19 Pandemic 

Most of the countries chose a lockdown process to protect their citizens from virus infections. This 

system causes significant shocks in demand and supply which impact almost all the sectors, i.e. 

liquidity crisis and resources & inventory breakdown of SME. According to WTO (2018), the 

three leading players of merchandise trade in 2017 are China, US and Germany. China alone 

covers 60% of demand and supply in the world. Hence, the decline of China's world trade fall 

impacts the rest of the world’s trade. The world trade US government will be reduced by US$ 905 

billion and US$ 2095 billion in short containment and long containment scenarios respectively 

(HASSANI & DOST 2020). Moreover, a causal relationship exists between COVID-19 deaths 

and exports and imports of China. For the USA, both Covid-19 deaths and cases have a direct 

causal relationship with exports and imports (Zhang, Dawei, Majeed, & Sohail, 2021). As it is 

mentioned above, since 2019, world trade has been facing challenges prior Covid-19 pandemic. 

This pandemic has caused an extra massive impact on world trade. Global trade decreased by 6% 

in 1Q20 year on year, followed by a decrease of 21% year on year in 2Q20. The volume of trade 

also dropped by 3% in 1Q20 compared to 4Q19 and continued its drop by 14% in 2Q20 (IFC, 

2020). The disruption of world trade has precipitously begun from the first half of 2020. 

Purchasing managers’ indices (PMIs) disclose new export orders of manufacturers and services 

have fallen straightly 27.1 and 21.7 respectively in April 2021 compared with a baseline value of 

50. In May 2020, it slightly increased but remained below trend (WTO, 2020). 

Most of the economies show a downward merchandise exports. The year-on-year 

percentage change of merchandise exports of selected leading traders as of April 2020 is not 

positive for most of the countries. It is ranged from -2% to -61%. Some Asian economies have not 

experienced declines in exports but their imports are still negative. For instance, China experienced 

14% down in imports and Thailand experienced 17% down in imports (WTO, 2020). 

There is no scope for services such as goods to produce, store or sell at later stages. 

Consequently, there is no opportunity to recover the lost revenues for cancelled flights, restaurants 

meals or hotel bookings. International travels, cultural and recreational activities account for more 

than 40% of world services exports. The year-on-year monthly percentage change of services 

exports of selected leading traders as of March 2020 is also not positive for most of the countries. 

These are reduced tremendously. For instance, Italy’s services exports fall by 40%.In a comparison 

of services exports of March 2020 with 2019, almost half of world services exports fall by 15%. 

More specifically, the leading services traders-US and UK, exports were reduced by 14% and 22% 

respectively. Some countries showed growth due to their dominated IT services, i.e., the services 

exports of India, Ukraine and Ireland were up by 1%, 3% and 8% respectively for the first quarter 

of 2020 (WTO, 2020). 

The impact of Covid-19 on other sectors also causes an impact for world trade as a 

consequence. This pandemic is considered as a threat and disaster for educational systems, 

tourism, health, financial system and economy of all countries (GRUSZCZYNSKI, 2020). For 

instances, this pandemic has not only affected China’s international trade but also severely affected 

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its air transportation sectors and tourisms such as- China’s economy is shrank by 6.8% in the first 

quarter of 2020 (Ruiz Estrada, Park, & Lee, 2020, Kazunobu & Hiroshi, 2020). The covid-19 

pandemic has turned the world into a recession in economies all over the world. There is also a 

downward trend in container shipping. In May 2020, a seasonal index of container port throughput 

was down 8 percent year-on-year. On the other hand, global commercial flights (both passenger 

& air transport) were reduced by 74 percent between 5 January and 18 April 2020. Consequently 

this caused a slowdown in merchandise trade and commercial services trade (WTO, 2020).  

Due to the world trade and other sector disruptions there is a negative impact of Covid-19 

on GDP. It fell by 2% which is below the benchmark of the world. The GDP of industrial countries 

and developing countries is reduced by 1.8% and 2.5% respectively (Maliszewska, Mattoo, & van 

der Mensbrugghe, 2020). Further, China’s GDP declined by 9.8% in the first quarter of 2020 in a 

comparison with the previous quarter. The United States and Euro areas also recorded a decline in 

GDP by 1.2% and 3.8% respectively. These all the rates are equivalent to the annualized of -45%, 

-4.8% and -14.4% respectively for China, US and Euro areas (WTO, 2020). 

 

COVID-19 pandemic and Global Financial Crisis (GFC)  

The world is experiencing the most disrupted global pandemic after the great depression of the 

1930s and global financial crisis of 2008 (Mirza, Rahat, Naqvi, & Rizvi, 2020). The financial crisis 

of 2008-2009 was the worst financial disruption since covid-19 pandemic. Although the causes of 

the financial crisis 2008 and covid-19 pandemic are different, there are similarities in 

consequences. Financial markets, world GDP, world trade and the economies of nations are being 

collapsed by both of these. But the depth of collapse is different. For instance, inflows of external 

private finance are estimated to fall by USD 700 billion compared to 2019. This impact is up by 

60% compared to the GFC of 2008 (OECD, 2020). The economic growth rate of developing 

countries is expecting more negative and the developed countries growth rate is expecting  -5.8% 

in 2020 while it was -3.4% in 2009 (UNCTAD, 2020). Further, in 2008-09 the PMI showed new 

exports of manufacturing was above 30 and in the first quarter of 2020 it is 27.1 with a baseline 

value of 50 (WTO, 2020). The sharp fall of global trade in the first few months of this pandemic 

exceeded the situation of the 2008-09 global financial crisis (IFC, 2020).  

 

World trade after this pandemic shock 

The third wave of covid-19 pandemic, especially Delta variant of India is shaking the world 

perilously. The world is searching for solutions to survive, i.e. the vaccination process. The 

countries also try to turn up their economies. The present situation of world trade is better than 

previous times of Q4 2019 and 2020. One of the most leading players of world trade, i.e China's 

international trade’s growth rate is 28.2% year-on-year to 14.76 trillion yuan ($2.3 trillion) in the 

first five months of 2021. Statistical data of the General Administration of China (GAC) shows 

that the country’s exports and imports had a growth of 30.1% & 25.9% year-on-year to 8.04 trillion 

yuan and 6.72 trillion yuan respectively between January to May 2021 (Global times, 2021). In 

the first half of 2020, world trade experienced a sharp decline whereas it recovered faster than 

expected in the second half of the same year. The world merchandise trade growth is increased by 

15% in the first quarter of 2021 relative to average of 2020.It is forecasted to increase of overall 

8% for 2021 (WTO, 2021). Regional trade trends of exports & imports in Q1 2021 increased by 

12% & 7% for developed countries and by 18% & 22% for developing countries in comparison 

with Q1 2020. The global trade is forecasted to increase by 16% for the second quarter of 2021 

(UNCTAD, 2021).Figure 1 shows the trade trends of exports and imports of major trading 

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economies of Q1 2021. China, India and South Africa are in a relatively better situation than other 

major economies during Q1 2021. 

 

 

 
Figure 1. World Trade trend of major economies for Q1 2021 

Source: UNCTAD 

 

The recovery of goods is stronger than services. World services trade is falling 9% year-

on-year in the first quarter of 2021. It was 21% down for all over the year of 2020. This services 

trade remained sluggish due to the weakness in travel services. Travel services are reduced by 62% 

in the first quarter of 2021. The new variants of covid-19 cause delayed recovery of international 

travel (WTO, 2021). The cumulative change in world trade from the start of each recession i.e., 

2020, 2015, and 2009 shows a faster recovery of 2020. Recovery trend is faster than the previous 

trade recessions. (UNCTAD, 2021) 

China India South Africa USA European Union

Goods (Exports) 22% 45% 25% 14% 13%

Goods (Imports) 20% 26% 36% 16% 14%

Services (Exports) 3% 14% -1% 10% -1%

Services (Imports) 27% 2% -26% 3% 7%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

World Trade trend of major economies for Q1 2021 (Q1 2021 relative to 2020 average)

Goods (Exports) Goods (Imports) Services (Exports) Services (Imports)

China India South Africa USA European Union

Goods (Exports) 20% 10% -4% 7% 1%

Goods (Imports) 25% 7% 31% 0% 6%

Services (Exports) -23% 2% -37% -14% -13%

Services (Imports) 22% -3% -62% -18% -6%

-80%

-60%

-40%

-20%

0%

20%

40%

World Trade trend of major economies for Q1 2021 (Q1 2021 relative to 2019 average)

Goods (Exports) Goods (Imports) Services (Exports) Services (Imports)

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CONCLUSION 
Globalization of trade makes the world easier. At the same time it also acts as a channel for 

spreading crises. Due to this pandemic situation some countries may be gainful and some may be 

downfall in world trade. For instance, the countries which are specialized in making medical 

assistance goods or giving medical assistance services will be gainful in this pandemic. From the 

second half of 2020 the merchandise trade is in recovery whereas the services trade is in a sluggish 

position. The most relative reason for the slow recovery of services trade is the imposed restrictions 

on international travels and tourism. The interesting thing is that the developed countries lagged 

behind the developing countries in recovery of world merchandise trade. The better world trade 

averages of the East-Asian countries increases the total world trade averages of the developing 

countries. The trend of world trade recovery of COVID-19 pandemic is much better than the 

previous trade recessions. But this recovery trend is uneven. For example- China has a higher 

global trade growth than the other Asian countries. The uneven distribution of vaccines and the 

accurate solutions of cure for covid-19 is related to the slow economic recovery. The responsible 

organizations or authority should ensure an equal distribution of vaccines. The world has to 

discover the cure of this disease. These can lead the nations to normal life and consequently to a 

fast recovery of world trade as well as economy. 

 

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