‘Full recovery of global trade remains at risk without greater Covid-19 vaccine roll-out’

The quicker global trade can recover, the better the outlook for economic development, but full recovery remains at risk without greater vaccine roll-out in developing and Least Developed Countries (LDCs), according to a joint note brought out by the World Trade Organisation and the World Bank.

The report also stressed on the importance of greater economic diversification for developing countries and LDCs to gain more resilience in dealing with a crisis situation.

Economic recovery

“Addressing vulnerabilities such as limited economic diversification, poor access to trade finance and digital technologies is important to recover faster and be resilient to future shocks. Accelerating the production and distribution of Covid-19 vaccines is a prerequisite to economic recovery in poorer countries,” the report titled `The Role of Trade in Developing Countries’ Road to Recovery’ pointed out.

It was jointly released by Ngozi Okonjo-Iweala, Director General, WTO and Indermit Gill, Vice President, Equitable Growth, Finance and Institutions, World Bank Group, on Monday.

Close coordination of health, customs, and any other relevant ministries and agencies involved in the process for licensing and clearing imported vaccine doses, vaccine inputs, and equipment is necessary to expedite access to these critical products, the report suggested.

Trade facilitating measures

According to preliminary estimates by the WTO, the trade coverage of trade-facilitating measures still in force at an estimated $180 billion remains higher than that of the trade-restrictive measures at about $106 billion. These trade facilitating measures, along with strong monetary and fiscal policy support from governments, and the arrival of effective vaccines against Covid-19, have been important factors in the trade recovery, the report said.

A major constraint faced by developing countries and LDCs in bouncing back is the limited economic diversification that many of them have. “An important lesson from Covid-19 is that some exporters in developing countries are not deeply embedded in trade networks and are therefore subject to heightened risk if contracts are suddenly cancelled. When the affected sectors dominate exports, there can be economy-wide impacts from cancelled orders on exports, jobs, and poverty,” the report noted.

For example, at the onset of the pandemic, major apparel brands and retailers based in the EU and USA cancelled orders, including those already produced by suppliers in developing countries. For example, in Myanmar about 40 factories had closed by the end of March 2020 and more than 25,000 workers, mostly female, had lost their jobs. Similar impacts were experienced in countries such as Bangladesh and Vietnam.

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