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

May 18, 2022

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

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.

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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