Commonwealth countries are estimated to have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade, according to 2021 Commonwealth Trade Review on ‘Energising Commonwealth Trade in a Digital World: Paths to Recovery Post-COVID’.
Released Tuesday, the Commonwealth Trade Review provides a timely and comprehensive analysis of the impact of the pandemic on the trade and investment flows of Commonwealth member countries.
The COVID-19 pandemic has taken a heavy toll globally, substantially impacting all Commonwealth members’ economies and leading to US$1.15 trillion in foregone gross domestic product (GDP) in just one year.
Compared to pre-pandemic growth trends in 2020, Commonwealth economies contracted by approximately 10 per cent.
Most Commonwealth countries also experienced a significant decline in overall Foreign Direct Investment (FDI) inflows in 2020, with a loss of US$153 billion to the Commonwealth.
Given the linkages between trade and investment and the role of FDI in supporting cross-border trade, these disruptions could limit trade prospects for Commonwealth countries.
Speaking ahead of the launch of the report, Rt Hon Patricia Scotland QC, Secretary-General of the Commonwealth, said: “Our member countries can harness the ‘Commonwealth advantage’ as a post-pandemic tailwind to accelerate recovery – especially small states, which have been particularly hard-hit.
“We know that trade can offer positive solutions to manage the pandemic and it is an essential factor for building back better.
“Commonwealth member countries can draw on the mutual support and benefits offered through initiatives such as our Connectivity Agenda, the Commonwealth Blue Charter, our Sustainable Energy Transition Agenda and other areas of our work and cooperation to help boost trade recovery in ways that are more inclusive, resilient and sustainable.”
A reassuring finding from the Trade Review is that the Commonwealth trade advantage has remained strong and resilient, and is now estimated at 21 per cent, on average. On the investment side, this advantage has almost tripled since 2015, to around 27 per cent.
Regional Trends
The economic fallout from COVID-19 varied across Commonwealth regions. The drop is higher for developing Commonwealth countries, where exports have contracted by approximately 10.1 per cent.
In absolute terms, Asian economies suffered the largest decline in exports (at US$146 billion), followed by African ($20 billion), Caribbean ($4.2 billion) and Pacific members (1.3 billion). However, relatively Caribbean Small Island Developing States (SIDS) underwent a greater slump.
Their global exports shrank by almost 20 per cent. These SIDS largely rely on the exports of services, particularly travel and tourism, which were hit hard in this pandemic.
For FDI the drop affected all developed and developing countries but to a varying degree, with Australia and Rwanda notably experiencing a 50 per cent decline in inflows compared with the pre-pandemic (2017-2019) average.
Only eight Commonwealth developing countries recorded higher overall FDI inflows in 2020 compared with this previous average. They were The Gambia, Malawi and Sierra Leone in Africa, India in Asia, Belize, Guyana and Trinidad and Tobago among Caribbean SIDS and Papua New Guinea in the Pacific.
The pandemic’s disproportionate impact on already vulnerable economies, societies and healthcare systems exacerbates existing challenges to achieving the UN Sustainable Development Goals.
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