AKADEMIYA2063’s COVID-19 portal

Macro Effects of Trade Disruption

GLOBAL COMMODITY MARKET DISRUPTIONS AND AFRICAN ECONOMIES

The pandemic has not left a single region of the world untouched. Its disruptive effects have equally reached into every corner of the global economy. Global primary commodity markets in particular are affected by many of the measures taken to adapt to and control the spread of the pandemic. Measures to minimize the risk of cross-border infections interfere with the normal operations of commerce, slowing down or impeding the movement of goods around the globe. The changes affecting global supply chains can have significant repercussion on national economies. Changes in prices received for exports or paid for imports translate into gains or losses of foreign exchange earnings. The same applies to changes in availability of cargo or the operation of airports and ports, as they affect the cost and volume of goods shipped. Changes in consumer behavior, including under confinement conditions or otherwise, have similar consequences.

The forces of supply and demand ultimately dictate which prices move in which direction. Individual economies are affected based on the exposure to shocks in different markets, which in turn depends on the bundle of goods they sell to or buy from foreign markets. The more their exports or imports are skewed towards goods for which global prices move favorably, the more they tend to benefit and vice versa.

Changes in exported and imported quantities as well as related prices are transmitted to domestic firms and consumers, resulting in changes in production activities and demand for goods, which in turn affect the pace of growth, available incomes and thus livelihoods. The final impact depends on the ability of the economy to adjust to the changing market conditions. The more an economy finds ways to compensate for changes in prices or traded quantities, the more it is likely to minimize the negative impact from global market disruptions.

INTRODUCTION

The COVID-19 pandemic is affecting African economies through many avenues, including global financial and capital markets, global commodity trade and markets, local supply and demand for products, and local labor markets and employment. This workstream focuses on disruptions in global commodity trade caused by COVID-19 and their effects on trade, growth and poverty in African countries. The analysis employs existing single-country Computable General Equilibrium (CGE) models for economywide analysis combined with microsimulation models for poverty analysis and is informed by the latest available country survey data, economywide social accounting matrices, international commodity price data and forecasts, and global trade data. The effects of COVID-19 are evaluated by comparing a pre-COVID-19 scenario based on previously existing commodity price forecasts with a COVID-19 scenario based on updated forecasts. A commodity price scenario is built for each country based on the composition of its external trade and is used to assess the impacts of COVID-19- related trade disruptions.

Bulletins
Briefs
Data, charts and maps
Past webinars

Bulletins

December 2, 2020

Impact of trade shocks on growth and poverty in selected countries

AKADEMIYA2063

AKADEMIYA2063’s COVID-19 portal

Macro Effects of Trade Disruption

Bulletins

Briefs

Data, charts and maps

Past webinars

Other workstreams

Food production systems disruption and effects on communities and the national economy

Mapping community vulnerability to identify potential major hot spots

Tracking food staples price changes and their impact on food and nutrition security

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