COVID-19: Containing the Pandemic to Address Economic & Humanitarian Crisis - Free Paper

Introduction

Covid-19 is causing severe economic and humanitarian crises. The disease continues to spread across the world, putting healthcare systems under stress in fighting the pandemic. The situation becomes worse when it spreads to developing economies (OECD, 2020). Economically, international economic growth declined by 1.5% by March 2020. The economy continues to collapse because it disrupts international trade. Therefore, governments and various institutions should work towards containing the pandemic to sustain globalization. The essay discusses how Covid-19 has affected global trade.

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How COVID-19 has Disrupted International Trade

The first effect of Covid-19 on international trade is that it has affected the global supply chain. Multinational corporations found it difficult to ensure the smooth flow of their operations during the pandemic. This is because many economies stopped their international flights, and this limited cargo transportation across the world (OECD, 2020). On the other hand, the demand for essential goods has increased steadily, resulting in urgent shipping. The result is an increase in product prices. Similarly, shipping ports internationally experienced a drop in cargo they handled during this period as a result of the closure of boundaries. Therefore, the disease has frustrated many international and domestic businesses, affecting exports and imports.

The other effect of the pandemic on international trade is that some countries imposed temporary restrictions as a way of protecting their territories against importing the disease. About eighty countries internationally have implemented restriction policies, as well as custom territories. It means that they have restricted the importation and exportation of goods and services to complete the international supply chain (Kamall, 2020). For example, some countries banned the importation of second-hand items, affecting the livelihoods of countries, depending on the items. On the same note, they restricted the movement of people from and to other territories, hindering the continuation of business operations.

The pandemic has contributed to the development of trade tensions between international economies. For example, the United States President blamed the Chinese government for the disease. As a result, the diplomatic conflicts influenced the US’s decision to renegotiate international trade agreements. Also, it introduced tariffs and non-tariff barriers against European countries and China (Kamall, 2020). The president declined to appoint the World Trade Organization Appellate Body judges implied the emergence of trade disputes internationally. Some economists argue that the United States is making protectionist moves. The dispute led to a decline in economic growth by 0.1% in 2019. Therefore, the pandemic has contributed to trade disputes, affecting the flow of goods and services internationally.

Additionally, the pandemic has contributed to the emergence of nationalist ideologies. Some economies are blocking the export of some goods and services they deem essential. The trend is likely to continue since every government wants to protect its resources for national benefit. Countries, such as Morocco, Serbia, and Kazakhstan have taken measures to ensure food safety by limiting the export of food supplies (Laker, 2020). The implication is that there is a significant disruption in the supply chain since nationalist countries cannot permit the exportation of goods and services they deem essential. The United States has threatened to nationalize critical firms, such as the ones manufacturing medical supplies. Therefore, the pandemic has contributed to the emergence of nationalism which has significant effects on international trade.

In response, governments imposing nationalist ideologies are likely to face harsh effects. This is because trade partners will follow suit and impose restrictions. For example, if the United States acts on the nationalist threat, the European Union is likely to take the same measures. Although the United States and the European Union have stable economic powers to strike deals, their trade wars are likely to affect international businesses (Laker, 2020). Developing countries are the most worried because they do not have domestic supplies. In the current situation, there is a crisis in the medical sector because many developing economies cannot source medical supplies locally. Therefore, the pandemic has contributed to harsh international trade behaviors.

Finally, lockdowns as a result of the pandemic have contributed to the decline in manufacturing. The output is likely to decline because of the imposition of the limited working hours. It is because of the limitations in working hours as a safety measure to reduce the spread of the pandemic. Consequently, multinational corporations have limited units to supply to the global market (Singh, 2020). The result is high demand compared to the supply and this contributes to a spike in prices. Due to the high cost of products and services, developing economies may find it challenging to compete in importing essential products and services. Therefore, some economies will thrive while others will slump.

Conclusion

Covid-19 continues to spread across the globe, stressing healthcare departments in the fight against the disease. Besides causing a humanitarian crisis, the pandemic has contributed to the decline in international economic growth. It has affected international trade by disrupting the supply chain process, the introduction of temporary restrictions, the emergence of nationalist ideologies, and a decline in the manufacturing sector. In response to nationalist ideologies, business partners impose the same restrictions and this affects international trade. Therefore, governments and non-governmental agencies must work together to contain the adverse effects of the disease to sustain economic growth.

References

Kamall, S. (2020, June 16). How will Covid-19 affect global trade? https://iea.org.uk/how-will-covid-19-affect-global-trade/

Laker, B. (2020, April 7). 3 Severe Implications of Coronavirus On Global Trade. Forbes. https://www.forbes.com/sites/benjaminlaker/2020/04/07/3-severe-implications-of-coronavirus-on-global-trade/#1736de943d11

OECD. (2020, June 12). COVID-19 and international trade: Issues and actions. http://www.oecd.org/coronavirus/policy-responses/covid-19-and-international-trade-issues-and-actions-494da2fa/

Singh, S. (2020, March 2). Impact of the Coronavirus on Business. Forbes. https://www.forbes.com/sites/sarwantsingh/2020/03/02/impact-of-the-coronavirus-on-business/#2e6583dd4414