By Piergiuseppe Fortunato, Economic Affairs Officer, UNCTAD and Annalisa Primi, Head, Structural Policies and Innovation Unit, OECD Development Centre
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Supply chain breakdowns and the revival of export restrictions in strategic sectors underline the importance of domestic and regional manufacturing capabilities.
Trade can be instrumental for development. But increasing concentration in global markets and repeated threats and rounds of tariff hikes are putting the global trading system, and the institutions around which it was built, under severe stress. The COVID-19 outbreak has exacerbated these tensions, precipitating the World Trade Organization (WTO) into a stalemate and leading many economies to simultaneously enact temporary export bans and restrictions on critical goods. All at a time when these goods are more needed than ever before, amidst a pandemic which has put vast parts of the planet under lockdown and limited economic activities in an unprecedented way.
Global annual growth this year might fall between 6% and 7.6% according to the OECD’s latest projections and economies in all regions of the world will shrink. Developing economies will likely be hit the hardest due to their role in global trade. Most developing economies specialise in supplying commodities. Their exports have been severely hit by the COVID-19 crisis, as demand for natural resources has plummeted, prices have collapsed, and traditional exports such as fresh, perishable agricultural products have been blocked due to logistical shortages. Continue reading