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The world is bracing for a massive hit to the global economy in the wake of the coronavirus (COVID-19) pandemic. Experts have warned of a US$1-2 trillion shortfall in global income this year, while world trade could contract by between 13 and 32 per cent.

As countries take drastic measures to fight the spread of the disease, we are seeing borders and businesses closed, domestic and international travel scaled back, and a totally transformed way of life due to social distancing. Currently, 2.6 billion people across the world are affected by their workplace closing.

The result is a sweeping drop in economic activity, a much less active workforce, on top of growing global insecurity for the future. Without ample government bailouts, poor developing countries and small states remain the most vulnerable in the face of the pandemic.

However, history has shown that with the right policies and support measures in place, the Commonwealth as a whole will eventually be able to overcome the economic fallout - though extremely bleak times lie ahead.

In particular, gradually reviving trade flows amongst 54 member countries - worth more than an estimated US$700 billion in 2019 - can play a fundamental role in boosting economic recovery, while harnessing the benefits of Commonwealth ties.

Recovering from the crisis

Given the unprecedented nature of current pandemic, I am cautious in comparing economic-induced and biological-induced crises. However, the 2008-2009 global financial crisis can offer some insights about the Commonwealth's possible performance.

Over the years following the global financial crisis, the Commonwealth's overall exports of both goods and services grew at a faster rate than the world average.

From 2010 to 2018, the Commonwealth's exports in goods, which make up 70 per cent of its trade, grew by around 8 per cent, compared to only 5.5 per cent for the world.

In fact, during the global trade slowdown of 2012 to 2016, the Commonwealth's services exports were especially resilient, expanding by 7 per cent, on average - more than twice the growth rate for the rest of the world.

Rapid population and per capita income growth (especially in Asia) are part of the driving forces behind the Commonwealth's buoyancy. With 2.4 billion people, 60 per cent of whom are under the age of 30, these drivers are unlikely to slow anytime soon - with or without coronavirus.

Commonwealth Advantage

Moreover, Commonwealth countries share historical ties, familiar legal and administrative systems, a common language of operation (English) and large dynamic diasporas, which help make trade and investment more convenient and efficient.

While not a formal trading bloc, this 'Commonwealth Advantage' enables member states to trade up to 20 per cent more with each other than with non-members, at a 21 per cent lower cost, on average. Our research also shows that these countries invest up to 27 per cent more within the Commonwealth than outside of it - almost tripling investment levels five years ago, which stood at 10 per cent.

The potential benefits have not been lost on countries, even as we prepare to face a severe slowdown of the global economy brought on by COVID-19.

The slowing of the Chinese economy (a major trading partner), the decline in tourism and travel, as well as plunging oil prices will certainly cause economic strain to members. However, investment flows to sectors such as e-commerce, digital technologies, cybersecurity, healthcare and biotechnologies could shore up, as business migrates online, and countries race to find a vaccine and other medical treatments.

Strengthening the connectivity among our countries is therefore critical, so that trade flows remain resilient during times of crisis. Digital connectivity will be especially key, as the need to interact virtually now will transform the way people trade and do business. It is already a major area of focus for the Commonwealth, under its flagship Connectivity Agenda.

While being extremely watchful of the pandemic's economic impacts, I am cautiously hopeful about the potential for intra-Commonwealth trade to act as a lifeline during the darkest of times. By leveraging the Commonwealth Advantage and robust policy responses, countries can bolster vital trade and investment flows, to eventually emerge at the end of the tunnel.

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We must leverage the 'Commonwealth Advantage' to counter the economic fallout of COVID-19

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By Patricia Scotland, Commonwealth Secretary-General The world is bracing for a massive hit to the global economy in the wake of the coronavirus (COVID-19) pandemic. Experts have warned of a US$1-2 trillion shortfall in global income this year, while world trade could contract by between 13 and 32 per cent.

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COVID-19 impact on commonwealth nations

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Hello, This is... | COVID-19 impact on commonwealth nations

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COVID-19 shock and intra-Commonwealth trade flows in goods and services, 2019 vs. 2020

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Since the beginning of 2020, Intra-Commonwealth exports from all the regions has been affected with the consequences of the real economy of covid-19. Furthermore, all leading intra-Commonwealth exporters have been hit due to pandemic. The Asian economies fells in export at $36 billion, African with $6.5 billion, Pacific members with $5b, Caribbean $4.2b, and the Caribbean SIDS affected with 16%. In comparison with global exports, including Singapore, India, UK and the South Africa, the intra-Commonwealth traders has fell an economic decline that has affected the supply and demand. On the other hand, in the UK the intra-Commonwealth export GDP decreased around 9.9%.
Many countries have reported high reductions to services export from 2020. The uncertainty of the pandemic has led a massive decline in demand for services and goods, and it has reduced the consumer demand in many sectors.

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Impact of the COVID-19 pandemic on Commonwealth countries' global exports in 2020

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Multiple tracks to trade recovery and building resilience that Commonwealth countries can follow 

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According to 2021 Commonwealth Trade Review, Commonwealth countries have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade.
The pandemic has impacted the livelihoods and lives of 2.4 billion Commonwealth citizens, with high number of deaths globally that has led social, economic, and environmental concerns which will take some time to address these challenges. The lockdown and many restrictions have been affected in usual economic and social activities. However, Covid-19 has led to increased use and rapid development of digital technology, innovation, and solutions in many areas. Furthermore, trade can be a solution in Commonwealth and intra-Commonwealth countries for economic recovery for building a more resilient, inclusive, and sustainable future.

Moreover, the WTO members can do a positive impact to recovery because is a multilateral co-operation on trade in environmental goods and services and others. Strengthen and reform the multilateral trading system, the WTO members should strengthen disciplines and work together on export restrictions and enhance in the world trade participation of developing countries.

The new trade agreements in the UKs with Commonwealth countries it offers opportunities to expand trade, investment and deepen economic cooperation, such as services, FinTech and digital trade.

Countries that rely on tourism must implement plans to recover demand and supply factors, support domestic and regional travel, to make the industry more resilient, such adopting digital technologies.

Commonwealth countries for trade recovery and competitiveness can make use of digital technologies and implement paperless trade and promote for agriculture and fisheries more sustainable and circular trade.

Recovery efforts must create overall importance of ensuring inclusive trade for youth and women and promoting women's economic empowerment.

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The Commonwealth is an association of 54 countries working towards shared goals of prosperity, democracy and peace. The Commonwealth Secretariat is the intergovernmental organisation which co-ordinates and carries out much of the Commonwealth's work, supported by a network of more than 80 organisations.

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GDP drop for large export markets (%) and Commonwealth market share 

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Commonwealth countries & Covid-19 impact

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Commonwealth countries & Covid-19 impact

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The commonwealth is an association of 54 countries, and the aim is to work towards democracy, prosperity, and peace. The intergovernmental organisation “The Commonwealth Secretariat” is supported by more than 80 organisations and coordinates the Commonwealth’s work to boost the economy, trade, protect the environment, support government, the rule of law, democracy, develop gender equality, health, education and support small states with challenges .
Since Covid-19 started, the number of deaths, infections and lockdowns has caused serious economic disruption in the Commonwealth and around the world. Global trade flows for the Commonwealth in 2020 was estimated at US$3.555 trillion. This is a decrease of $145 billion compared to 2019. The global economic slowdown and GDP contraction with important trading partners and Covid disruptions have declined on Commonwealth countries from goods and services exports. Despite China, in Singapore and India has declined more than 5% of GDP. In the EU, which is the biggest market exports of Commonwealth fells 6.6% and USA, goods and services declined 3.5%. This has affected limited economic support to businesses in these countries, and in exporting activities and production.

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Effect of COVID-19 on economic growth of Commonwealth countries, 2019 vs. 2020

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Intra-Commonwealth trade has been affected significantly by COVID-19 but is expected to surpass US$700 billion by 2022. 

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The "Commonwealth advantage" can provide aid and support recovery from the pandemic, especially in the small states hardest hit. Trade offers positive solutions to manage the pandemic and is an essential tool to build back better. The Commonwealth's trade advantage has remained strong and resilient, and is now estimated at 21%, on average. On the investment side, this advantage has nearly tripled since 2015, to around 27%. Furthermore, intra-Commonwealth exports as a future growth are expected to surpass by 2022 US$700 billion. Implement digital technologies, apply trade agreements, promote cooperation in services, make connectivity much better to boost their trade. On the other hand, Commonwealth offers the young population another promising dividend.