An anatomy of the impact of COVID‐19 on the global and intra‐Commonwealth trade in goods

Abstract

This article employs gravity modeling to examine theeffect of COVID-19 on global and intra-Commonwealthtrade. It uses bilateral monthly exports, number ofCOVID-19 cases and deaths and the stringency of mea-sures. The main novelty is the use of price indices asproxies for multilateral resistance terms, which allowus to identify, supply, and demand effects of COVID-19on bilateral trade. The incidence of COVID-19 impactsCommonwealth trade flows, the effect varies with thedevelopment level. High numbers of COVID-19 cases,including deaths, in low-income importers reducedCommonwealth exports unlike high-income importersthat show higher exports. The incidence of COVID in anexporters’ neighbouring countries impacted trade andrestrictions in high-income countries increased Com-monwealth trade. Short-term trends project a negativechange in both exports and imports of Commonwealthcountries.