Shocks, international trade, and diversification: Lessons from the pandemic

Shipping containers in a port.

COVID-19 caused a collapse in international trade. Image: Unsplash/ CHUTTERSNAP

Ting Lan
Economist, IMF
Davide Malacrino
Economist, Research Department, IMF
Adil Mohommad
Economist, Research Department of the IMF
Andrea F. Presbitero
Senior Economist, International Monetary Fund
Galen Sher
Economist, International Monetary Fund
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Graph showing factors associated with the demand model’s forecast errors in 2020
Old models no longer worked as well during the pandemic. Image: Global Health Security Index; Google, Community Mobility Reports; Hale and others (2021); Our World in Data; World Trade Organization; and IMF staff calculations.

Graph showing the international spillover effects of lockdowns
International spillovers from the containment policies by trading partners also contributed to the collapse in trade in 2020. Image: Hale and others (2021); IMF, Direction of Trade Statistics; and IMF staff calculations.

Graph showing shifting market shares.
Pandemics, wars, climate change and cyberattacks prompt GVCs to become more resilient. Image: Trade Data Monitor; and IMF staff calculations.

Graph showing gains from diversification.
More internationally diversified sourcing could reduce the economic impact of a supply disruption. Image: IMF staff calculations.

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Related topics:
COVID-19Trade and InvestmentSupply Chains
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