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How will the Commonwealth Advantage aid in the recovery of nations post-COVID 19?

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How will the Commonwealth Advantage aid in the recovery of nations post-COVID 19?

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Small Commonwealth nations that depend on intra-Commonwealth trade are expected to benefit greatly from the ‘Commonwealth advantage’. The Commonwealth (2021) nations within the association save up to 21 percent in trade costs. The Commonwealth nations can use the advantage of being a member of the bloc to attract FDI inflows from each other as well as countries beyond the association. The similarity in administrative, legal, and language systems is also an important source of competitive advantage with the opportunities offered by digital trade (Commonwealth, 2021) The greatest challenge to small businesses in Commonwealth countries as they pursue e-commerce is insufficient knowledge about international and national regulations that govern trade (Commonwealth, 2021). Accordingly, given the similarity between the different nations in Commonwealth, businesses in various countries can use the bloc to begin their online business before expanding beyond the Commonwealth region.

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Commonwealth countries are estimated to have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade, according to 2021 Commonwealth Trade Review on "Energising Commonwealth Trade in a Digital World: Paths to Recovery Post-COVID".

Released today, the Commonwealth Trade Review provides a timely and comprehensive analysis of the impact of the pandemic on the trade and investment flows of Commonwealth member countries.

The COVID-19 pandemic has taken a heavy toll globally, substantially impacting all Commonwealth members economies and leading to US$1.15 trillion in foregone gross domestic product (GDP) in just one year. Compared to pre-pandemic growth trends in 2020, Commonwealth economies contracted by approximately 10%.

Most Commonwealth countries also experienced a significant decline in overall Foreign Direct Investment (FDI) inflows in 2020, with a loss of US$153 billion to the Commonwealth.

Given the linkages between trade and investment and the role of FDI in supporting cross-border trade, these disruptions could limit trade prospects for Commonwealth countries.

Commonwealth advantage

Speaking ahead of the launch of the report, Rt Hon Patricia Scotland QC, Secretary-General of the Commonwealth said:

"Our Commonwealth members can harness the 'Commonwealth advantage' to provide a post-pandemic tailwind that supports recovery, especially in small states, who have been particularly hard-hit. We know that trade can offer positive solutions to manage the pandemic and it's an essential tool for building back better. Commonwealth members can draw on the mutual support and benefits offered through initiatives such as the Commonwealth's Connectivity Agenda, Blue Charter, Sustainable Energy Transition Agenda and our other work that helps boost trade recovery in a more inclusive, resilient and sustainable way."[GR1]

A reassuring finding from the Trade Review is that the Commonwealth trade advantage has remained strong and resilient, and is now estimated at 21 per cent, on average. On the investment side, this advantage has almost tripled since the 2015, to around 27 per cent.

Regional trends

The economic fallout from COVID-19 varied across Commonwealth regions. The drop is higher for developing Commonwealth countries, where exports have contracted by approximately 10.1%.

In absolute terms, Asian economies suffered the largest decline in exports (at US$146 billion), followed by African ($20 billion), Caribbean ($4.2 billion) and Pacific members (1.3 billion). However, relatively Caribbean Small Island Developing States (SIDS) underwent a greater slump. Their global exports shrank by almost 20 per cent. These SIDS largely rely on the exports of services, particularly travel and tourism, which were hit hard in this pandemic.

For FDI the drop affected all developed and developing countries but to a varying degree, with Australia and Rwanda notably experiencing a 50 per cent decline in inflows compared with the pre-pandemic (2017-2019) average.

Only eight Commonwealth developing countries recorded higher overall FDI inflows in 2020 compared with this previous average. They were The Gambia, Malawi and Sierra Leone in Africa, India in Asia, Belize, Guyana and Trinidad and Tobago among Caribbean SIDS and Papua New Guinea in the Pacific.

Global Goals

The pandemic's disproportionate impact on already vulnerable economies, societies and healthcare systems exacerbates existing challenges to achieving the UN Sustainable Development Goals.

Future prospects and leveraging technology to boost recovery

The changes brought about by the pandemic underline the centrality of technology to all aspects of our lives, from the rapid development of vaccines and 3D printing of medical equipment and devices to e-commerce and the online delivery of services.

Furthermore, the growth of investment in renewable energy is hugely encouraging as Commonwealth members aspire to greener, more regenerative development.

Looking forward, intra-Commonwealth exports are expected to rebound and surpass US$700 billion by 2022. However, FDI inflows to the Commonwealth are expected to decline by 18 per cent in 2021, and a further 7 per cent in 2022. As a result, the total value of FDI inflows to the Commonwealth is expected to decline to US$136 billion in 2022, or a loss of around $220 billion compared with 2019.

While there are still many challenges ahead, the 2021 Commonwealth Trade Review identifies possible pathways to help guide Commonwealth policymakers and businesses towards a more inclusive, sustainable and resilient recovery, especially through digital trade and technologies.

Explore the digital report at: trade-review.thecommonwealth.org

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US$345 billion loss in trade for Commonwealth countries due to pandemic

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Explore the digital report at: trade-review.thecommonwealth.org Commonwealth countries are estimated to have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade, according to 2021 Commonwealth Trade Review on "Energising Commonwealth Trade in a Digital World: Paths to Recovery Post-COVID".

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Another source of future growth is the Commonwealth advantage explained in the YouTube video. The information in the next padlet can be used to further explain the Commonwealth advantage.

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Business and the Commonwealth (II): Exploring the notion of a “Commonwealth advantage” in trade

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Question 1b. Identify and evaluate the sources of future growth including from the Commonwealth advantage. "Sources of Future Growth for Commonwealth nations".

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Question 1b. Identify and evaluate the sources of future growth including from the Commonwealth advantage. "Sources of Future Growth for Commonwealth nations".

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The use of digital technologies will facilitate recovery. The pandemic showed that e-commerce can thrive as the main way of doing business. Intra-Commonwealth (2021) digital trade grew by almost 13 percent. The Commonwealth nations need to empower e-commerce in their jurisdictions by, for example, creating dedicated committees to deal with emerging issues in digital trends such as cyber security. An excellent example is Jamaica’s National Public Key Infrastructure (NPKI) project under the Ministry of Industry (Banga and Raga, 2021).

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Trade continues to recover as governments bring COVID-19 under control. According to Commonwealth (2021), exports will rebound to the pre-pandemic levels surpassing $700 billion in 2022. It is important to ensure that all nations within Commonwealth, not just the developed ones, conduct mass COVID-19 vaccination efforts to ensure that the entire globe achieves herd immunity (Commonwealth, 2021). Currently, Asian nations that export merchandise are already recovering from the pandemic with their trade income expected to reach the 2019 levels (Commonwealth, 2021).

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Intra-Commonwealth trade dropped by $60 billion due to the pandemic. Asian countries are the largest exporters of goods within the Commonwealth regions. South Africa, Nigeria, and Ghana account for 80 percent of Africa's exports to the Commonwealth. The UK is the largest exporter of services within the bloc with a third of service exports as of 2019. During and after the pandemic, intra-Commonwealth trade declined sharply since two-thirds of the trade-in these regions is commodities and manufactured goods, which were hit hard by the pandemic (Commonwealth, 2021). Likewise, services account for half of the exports within the Commonwealth nations. Therefore, countries in the Caribbean that primarily deal with tourism and travel exports were hit the hardest. For example, Airlines in Australia, Canada, South Africa, Namibia, and the UK entered bankruptcy protection following the impacts of the pandemic. There was a disproportionate impact on women as most of them work within the service sectors (Commonwealth, 2021).

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According to Commonwealth (2021), the pandemic cost nations within the association up to $345 billion in trade. In 2020, GDPs within Commonwealth member nations experienced a loss of over $1.15 trillion as economies contracted by up to ten percent. Similarly, FDI (foreign domestic investment) inflows into Commonwealth (2021) reduced by $153 billion in one year. Importantly, the impacts of the COVID-19 pandemic were not felt uniformly. The hardest-hit economies were among the developing world because they have always been vulnerable. Asian economies felt the most impact with regional exports reducing by over 10 percent. Countries in the Caribbean that primarily deal with the export of leisure and tourism services suffered the largest slump in absolute GDP terms as the travel restrictions and lockdown measures reduced tourist activities (Commonwealth, 2021). Nonetheless, while FDI inflows are expected to remain lower compared to the pre-pandemic levels, eight developing nations in Africa, India, and the Caribbean reported an increase in FDI inflows.

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Commonwealth countries are estimated to have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade, according to 2021 Commonwealth Trade Review on "Energising Commonwealth Trade in a Digital World: Paths to Recovery Post-COVID".

Released today, the Commonwealth Trade Review provides a timely and comprehensive analysis of the impact of the pandemic on the trade and investment flows of Commonwealth member countries.

The COVID-19 pandemic has taken a heavy toll globally, substantially impacting all Commonwealth members economies and leading to US$1.15 trillion in foregone gross domestic product (GDP) in just one year. Compared to pre-pandemic growth trends in 2020, Commonwealth economies contracted by approximately 10%.

Most Commonwealth countries also experienced a significant decline in overall Foreign Direct Investment (FDI) inflows in 2020, with a loss of US$153 billion to the Commonwealth.

Given the linkages between trade and investment and the role of FDI in supporting cross-border trade, these disruptions could limit trade prospects for Commonwealth countries.

Commonwealth advantage

Speaking ahead of the launch of the report, Rt Hon Patricia Scotland QC, Secretary-General of the Commonwealth said:

"Our Commonwealth members can harness the 'Commonwealth advantage' to provide a post-pandemic tailwind that supports recovery, especially in small states, who have been particularly hard-hit. We know that trade can offer positive solutions to manage the pandemic and it's an essential tool for building back better. Commonwealth members can draw on the mutual support and benefits offered through initiatives such as the Commonwealth's Connectivity Agenda, Blue Charter, Sustainable Energy Transition Agenda and our other work that helps boost trade recovery in a more inclusive, resilient and sustainable way."[GR1]

A reassuring finding from the Trade Review is that the Commonwealth trade advantage has remained strong and resilient, and is now estimated at 21 per cent, on average. On the investment side, this advantage has almost tripled since the 2015, to around 27 per cent.

Regional trends

The economic fallout from COVID-19 varied across Commonwealth regions. The drop is higher for developing Commonwealth countries, where exports have contracted by approximately 10.1%.

In absolute terms, Asian economies suffered the largest decline in exports (at US$146 billion), followed by African ($20 billion), Caribbean ($4.2 billion) and Pacific members (1.3 billion). However, relatively Caribbean Small Island Developing States (SIDS) underwent a greater slump. Their global exports shrank by almost 20 per cent. These SIDS largely rely on the exports of services, particularly travel and tourism, which were hit hard in this pandemic.

For FDI the drop affected all developed and developing countries but to a varying degree, with Australia and Rwanda notably experiencing a 50 per cent decline in inflows compared with the pre-pandemic (2017-2019) average.

Only eight Commonwealth developing countries recorded higher overall FDI inflows in 2020 compared with this previous average. They were The Gambia, Malawi and Sierra Leone in Africa, India in Asia, Belize, Guyana and Trinidad and Tobago among Caribbean SIDS and Papua New Guinea in the Pacific.

Global Goals

The pandemic's disproportionate impact on already vulnerable economies, societies and healthcare systems exacerbates existing challenges to achieving the UN Sustainable Development Goals.

Future prospects and leveraging technology to boost recovery

The changes brought about by the pandemic underline the centrality of technology to all aspects of our lives, from the rapid development of vaccines and 3D printing of medical equipment and devices to e-commerce and the online delivery of services.

Furthermore, the growth of investment in renewable energy is hugely encouraging as Commonwealth members aspire to greener, more regenerative development.

Looking forward, intra-Commonwealth exports are expected to rebound and surpass US$700 billion by 2022. However, FDI inflows to the Commonwealth are expected to decline by 18 per cent in 2021, and a further 7 per cent in 2022. As a result, the total value of FDI inflows to the Commonwealth is expected to decline to US$136 billion in 2022, or a loss of around $220 billion compared with 2019.

While there are still many challenges ahead, the 2021 Commonwealth Trade Review identifies possible pathways to help guide Commonwealth policymakers and businesses towards a more inclusive, sustainable and resilient recovery, especially through digital trade and technologies.

Explore the digital report at: trade-review.thecommonwealth.org

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US$345 billion loss in trade for Commonwealth countries due to pandemic

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Explore the digital report at: trade-review.thecommonwealth.org Commonwealth countries are estimated to have lost up to US$345 billion worth of trade in 2020, including $60 billion in intra-Commonwealth trade, according to 2021 Commonwealth Trade Review on "Energising Commonwealth Trade in a Digital World: Paths to Recovery Post-COVID".

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This video gives an overview of the Commonwealth, which has 53 members spread among six continents and accounts for a fifth of the world's geographical area.

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Commonwealth Heads of Government Meeting 2018