The impact of Covid-19 on international trade : evidence from the first shock

Introduction
In terms of economic activity, countries were progressively recovering from the coronavirus
pandemic (hereinafter, COVID-19) in the third quarter of 2020. COVID-19 was declared a
pandemic by the World Health Organization (WHO) on March 11, 2020. As a result, many
governments have imposed limitations on people and businesses in order to curb the spread
of the coronavirus. Several countries have imposed city-wide or national curfews.
Furthermore, numerous governments have established immigration restrictions on
foreigners. In the second quarter of 2020, in particular, tight limitations were observed. This
was the pandemic's initial wave. Following that, most countries began to relax their
limitations. As a result, economies have begun to recover their growth. For example, GDP
growth in some nations, such as China, was positive in the third quarter. Despite the fact that
the second wave impacted Western countries in the third quarter, lessons learned from the
first pandemic allowed people's social and economic activities to be better sustained during
the succeeding epidemic.
The goal of this study was to see how COVID-19 affected foreign trade and how those
effects varied over time. In both 2019 and 2020, we looked at monthly statistics on global
commerce from January to August. This includes the time following the initial wave. Although
it's difficult to pinpoint the exact end date of the first wave in each country, most countries'
verified cases or deaths peaked around April 2020. COVID-19 had a large and varied impact
on international trade. The COVID-19 damage revealed itself in exporting countries as a
decline in the scope of production and export supply. Exports are likely to fall, especially in
industries and countries where remote work/operation is more difficult. In an importing
country, the effect of COVID-19 harm is primarily attributable to a drop in aggregate demand.
People's incomes and visits to retail shops both decreased, resulting in a decrease in
demand. We looked at how COVID-19's negative impacts varied over time to see how they
altered.
After the first wave, we expected COVID-19's negative impact on foreign trade to diminish.
The majority of people in the world, particularly the present generation, have never been
subjected to such limitations or lockdown orders. We didn't know how to "behave" in the
pandemic environment at the start of the first wave. As a result, several countries have
chosen a simple solution: forcing workers to stay at home and shutting down companies and
offices. Through this experience, we gained some knowledge and eventually began
implementing infection control methods (for example social distance). In addition, internet
business meetings and conferences have become more common. Online shopping has also
become a popular technique of acquiring items. As our understanding of the pandemic
grows, the negative effects of COVID-19 are predicted to diminish with time.
Organization (Overall order, flow and transitions)
Theoretical underpinnings of how COVID-19 influences cross-national trade. To begin with,
COVID-19 impedes trade by raising trade costs between countries. COVID-19 cases/deaths,
for example, lower on-site presence of workers in the transportation and shipping sectors,
such as truck drivers and port workers. Lockdown regulations and port restrictions hinder
aviation and maritime travel between countries. For example, Heiland and Ulltveit-Moe
(2020) reported a 29 percent decline in container ship departures in the first week of April
2020 compared to 2019. Transportation delays and freight costs increase as a result of
these interruptions in the transportation sector. Furthermore, the spread of infectious
diseases has an impact on both the demand and supply sides of the economy. Following
that, we'll look at the potential implications of COVID-19 damages in both exporting and
importing countries.
Let's start with COVID-19's effects in exporting countries. COVID-19's proliferation resulted
in social isolation and lockdown measures. These restrictions limit people's ability to move
around their workplaces. Some workers are forced to miss work due to school closures in
order to care for their children. Death and long-term illness have a direct impact on the
workforce. These adjustments decrease the supply of goods and make them less price
elastic, causing the country's supply curve to shift higher and steepen. Damage to COVID-
19 and consequent lockdown orders affect transportation sectors in exporting countries,
increase the cost of exporting by increasing port and terminal handling fees.
In conclusion, it is natural that COVID-19 damage reduces the scale of manufacturing in an
exporting country, hence limiting the country's export supply. In terms of the severity of
supply shocks, there will be industrial heterogeneity. Supply shocks will be lower in
businesses that provide vital products, such as food and medical products, than in
businesses that provide non-essential products, such as automobiles and machinery, for
example. This is due to the fact that countries are attempting to protect the supply of critical
goods, and lockdown orders such as factory closures are rarely imposed on the
manufacturers of these goods.
Quality of information (Journal, Data, Graph)

However, thanks to the introduction of remote work/operation, the negative impact may
diminish over time. Telecommunications and information technology (IT) advancements will
enable remote work/operations and lessen supply shocks in the manufacturing industry.
Many countries have attempted to keep their economies afloat by implementing
telecommuting programmes. These systems aid in reducing the negative impacts of COVID-
19 on trade. In addition, such systems may boost production or efficiency. Exports grow in
this instance. There will also be differences in how remote work/operations replace on-site
production activities across industries. Despite the advancement of technology, exports in
certain areas where remote work/operation is less viable are anticipated to continue to
decline. Such activities, for example, are difficult to carry out in labor-intensive industries like
textiles, footwear, and leather goods. Even in capital-intensive industries like machinery and
transportation equipment, if remote work/operation is less practical and in-person presence
is increasingly necessary in the manufacturing process, the production scale reduces
significantly. Only 22% of manufacturing work may be completed at home, according to
Dingel and Neiman (2020).
COVID is a virus that infects people. This rapid transition from offline to online purchasing is
projected to continue, at least to some extent, as 19 infections/deaths diminish or stop and
lockdown restrictions are eased. Consumers must make upfront investments to migrate to
online purchase, as Watanabe and Omori (2020) indicate. The cost of purchasing personal
computers or cellphones, the cost of connecting to the Internet, the cost of acquiring
software, and the cost of learning how to use EC platforms are all included in these
investments. People are hesitant to return to the status quo after making these investments,
thus this new purchasing pattern will endure. In other words, the negative effects on imports
of goods that are difficult to purchase online are likely to endure. Furthermore, the increasing
growth of online shopping and teleworking has increased import demand for IT-related
apparatus such as computers, cellphones, microphones, and cameras.

Begin with a summary of recent trade developments. Table 1 compares monthly exports
from 34 nations in 2020 to those in 2019, per industry, as described in a harmonised system
section. Regrettably, China only recorded total trade in January and February of 2020. As a
result, the trading in these two months is summed up in this table. 13 Row “Total”
demonstrates a drop in global trade, especially in April and May 2020. At the industrial level,
there was a similar reduction in those months. Mineral items, leather products, footwear
products, and transportation equipment, in particular, have seen a significant drop. In April
and May 2020, trade values in transport equipment fell by 60% compared to the same
months in 2019. Vegetable products, animal or vegetable fats, food goods, chemical goods,
and precious metals, on the other hand, have limited impact.
Table 2 shows exports by continent for both importers and exporters. It's worth noting that
the Pacific region only has one exporting country, Australia, and four importing countries. 14
There are a few interesting findings. To begin with, African exports dropped by more than
half in April 2020. Imports to Africa have also dropped dramatically. Second, with the
exception of intra-American commerce, European exports declined more than those from the
Americas. Exports from Asia, on the other hand, appear to be less affected. Exports had
already rebounded to the previous year's level by August 2020 in this example.
Originality
This study looks at how COVID-19's impact on foreign trade have altered over time. To do
so, we look at monthly statistics from January to August in 2019 and 2020 on global
commerce. The exports of 34 countries to 173 nations are included in our research. We
calculated the gravity equation using a variety of factors as proxies for COVID-19 damage.
The following is a summary of our findings: First, regardless of our methods for calculating
the COVID-19 pandemic's severity, COVID-19 has a significant detrimental impact on both
exporting and importing countries' international trade. Second, those consequences,
particularly COVID-19's effects in importing countries, Since July 2020, it has tended to
become unimportant. This finding suggests that the negative effects of COVID-19 on foreign
trade were somewhat mitigated after the initial wave of the epidemic. Third, we discovered
that different industries have different consequences. Negative effects on non-essential,
long-lasting items last for a long period, although favourable benefits have been documented
in companies that produce medical products.
The following is a summary of the findings: First, we identified negative effects of COVID-19
on international trade in both exporting and importing countries, regardless of our severity
metrics. Second, since July, those effects, particularly COVID-19's effects on importing
countries, have tended to be minor. Third, COVID-19 caused a drop in mineral, leather, and
transportation equipment imports, particularly in April and May. The negative impact on non-
essential, long-lasting imports are likely to endure. On the other hand, the influence on
equipment products, which include IT-related products, is significant, Since July, it has
become inconsequential. Furthermore, we discovered that COVID-19 had good impacts on
importing countries in various medicinal products, especially throughout the months of March
and May. Fourth, in exporting countries, COVID-19 was projected to have a negative impact
on labour-intensive industries like textiles. The negative impact on the footwear industry, in
particular, continued until August. COVID-19 had a significant impact on the transport
equipment industry in exporting countries, particularly in April and May.
Conclusion
The impact of COVID-19 on international trade were explored in this study, as well as how
these effects varied over time. To accomplish so, we looked at monthly statistics from
January to August in 2019 and 2020 on global commerce. We calculated the gravity
equation using a number of variables as a proxy for COVID-19 damage.
First, regardless of which measure is used to quantify the severity of COVID-19, we
discovered that it has a considerable negative impact on both exporting and importing
countries' international trade. Second, after July 2020, those effects, particularly COVID-19's
impact on importing countries, have tended to go away. COVID-19's negative effects in
exporting countries remained until August 2020, though their magnitude diminished over
time. These findings suggest that after the first wave of the pandemic, the negative effects of
COVID-19 on foreign trade were somewhat mitigated. Third, a more in-depth examination of
specific industries indicated that different industries have different consequences.
Labour-intensive businesses, for example, have been found to be more vulnerable to
COVID-19's negative consequences in exporting countries. The footwear industry, in
particular, saw a negative influence that lasted until August 2020. In both exporting and
importing countries, the transport equipment business displayed the detrimental
consequences of COVID-19 damage, particularly in April and May 2020. COVID-19 has
been found to have a favourable impact on imports in industries that produce medical
products.