The COVID-19 pandemic has exposed both the strength and fragility of international trade links. Like other countries, Ukraine has appeared at the crossroad of two trends. On the one hand, in response to panic, Ukraine had imposed several protective measures, e.g. temporarily banning exports of personal protective equipment (PEP) and some food products.
On the other hand, Ukraine has been interested in boosting its exports to counterweight the negative economic trends caused by the pandemic. Moreover, the country has badly needed PEP imports.
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VERONIKA MOVCHAN / SELF-SUFFICIENCY VERSUS DEPENDENCE ON INTERNATIONAL TRADE: THE LESSONS FROM COVID-19 FOR UKRAINE
Currently, it seems that in Ukraine, proponents of international trade openness have been taking over. However, the challenges exposed by the pandemic, including the fragility of reliance on global markets, remain relevant.
This article analyzes Ukraine and its partners’ crisis responses within the dichotomy of self-sufficiency versus dependence on international markets. We aim to take lessons on how to ensure both smooth trade and stronger internal crisis resilience.
World Trade amid the COVID-19 Pandemic
The initial expectations about global trade trends against the background of the COVID-19 pandemic in 2020 were especially disastrous. According to the WTO assessments presented in April 2020, world trade was expected to decline by approximately 13% and 32%, depending on how the situation would evolve. However, despite significant downside risks, international trade appeared to be quite resilient to the shocks.
In 2020, world trade reduced by only 5%. According to the WTO, several factors contributed to this better-than-expected trade performance. First, global economic activity and consumption were maintained through strong fiscal and monetary stimulus.
Second, households shifted the consumption from non-traded services towards goods to be shipped by expanding delivery services.
Third, technologies allowed remote working, thus preventing larger-scale disruptions for many businesses. Fourth, the initial wave of protectionism was constrained and mainly reverted, with many temporary restrictions abolished.
The year 2021 has been the year of recovery. Despite multiple uncertainties, the WTO expects world trade to boost by 8%. Moreover, the United Nations Conference on Trade and Development (UNCTAD) has already reported a solid rebound in the first quarter of 2021 at above 10% year-on-year.