Trade After Turmoil

The report analyzes how pre-pandemic economic conditions in 60 developing nations create vulnerabilities to COVID-19-induced trade shocks. It examines five key markets—production, trade, capital, currency, and labour—to identify risks such as global value chain disruptions, 'sudden stops' in foreign investment, and currency crises. The analysis emphasizes that countries with high reliance on specific sectors like international tourism or those with significant trade deficits and foreign-denominated debt are most at risk. The author urges the diversification of global value chains over protectionism to build long-term resilience.

• Developing economies are highly susceptible to secondary economic impacts of COVID-19 due to their integration into global supply chains and reliance on international demand and investment.
• Countries with high concentrations of production in agriculture or those with low services sectors (below 40% of GDP) are more likely to rely on subsistence farming and lack efficient production practices.
• International tourism is a critical vulnerability for many sample countries, with a sample average of 5.4% of GDP compared to a 2% global average, and is expected to suffer long-term disruptions due to travel restrictions.
• High exposure to global value chains increases risk; 12 sample countries have over 80% of merchandise trade classified as intermediate goods, making them vulnerable to demand drops from countries using those goods for production.
• Significant trade deficits pose a risk to domestic demand; 50 out of 60 sample countries ran a trade deficit in 2018, with 16 having deficits exceeding 15% of GDP.
• The report identifies a risk of 'sudden stops' in capital markets, where a decrease in capital inflows, such as Foreign Direct Investment (FDI), leads to spikes in lending rates, currency depreciation, and potential banking crises.
• Currency market stability is threatened by high sovereign debt and foreign-denominated liabilities, which can exacerbate depreciation shocks and lead to defaults.
• Labour market vulnerabilities are high in many developing nations, with 14 sample countries reporting that vulnerable workers (self-employed or contributing family members) make up over 70% of employed people.
• Gender disparities in employment reduce household resilience to economic shocks, particularly in countries like the West Bank, Jordan, Algeria, Tunisia, and Egypt, where employment-to-population ratios are very low and gender gaps exceed 40%.
• The report recommends that countries diversify global value chains rather than adopting protectionist policies, which could prolong the economic shock.

APA

Woolley, N. (2021). Trade After Turmoil. International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-03/trade-turmoil-export-markets-covid-19.pdf

Chicago

Woolley, Nicholas. Trade After Turmoil. International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-03/trade-turmoil-export-markets-covid-19.pdf.

Wikipedia

{{cite report |last1=Woolley |first1=Nicholas |title=Trade After Turmoil |publisher=International Institute for Sustainable Development |date=March 2021 |url=https://www.iisd.org/system/files/2021-03/trade-turmoil-export-markets-covid-19.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{woolley2021trade, author = {Woolley, Nicholas}, title = {{Trade After Turmoil}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = mar, url = {https://www.iisd.org/system/files/2021-03/trade-turmoil-export-markets-covid-19.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }