COVID-19 and Trade: Challenges Ahead for Least Developed Countries and Small Island Developing States

Far beyond a joke: ODI’s article paints a clear picture of COVID-19’s negative impact on the trade capacities of least developed countries (LDC) and small island development states (SIDS) and therefore the realisation of trade-related SDG targets.

© Adam Cohn 2020

According to author Jodie Keane vulnerable states will face four major challenges due to corona pandemic:

Firstly, LDC’s and SIDS’ economic growth is dependent on trade. With COVID-19’s adverse impact on both the demand and supply side, these countries will become more vulnerable to external shocks.

Secondly, their major trading partners – Asia, Europe and the USA – are heading toward an economic recession. With global growth rates on the decline, the sustainable economic growth of LDCs will likely be jeopardised and inhibit the realisation of SDG trade targets such as sustaining economic growth in accordance with national circumstances or doubling LDC's share of world trade by 2020.

Thirdly, global value chains tend to suffer under external trade shocks as demonstrated by the financial crisis of 2008/9. As a result, workers employed in just-in-time supply chains like in Cambodia or Bangladesh may permanently lose their jobs due to the corona pandemic.

Lastly, past economic development trajectories of LDC’s are unlikely to be sustained during 2020, or beyond. Therefore, LDC’s expected to graduate over the next few years may no longer be able to do so.

2020 was meant to be dedicated toward the assessment of SDG progress. Instead, the year now needs to be directed toward re-thinking and developing adequate responses to global crises and to unifying efforts to support the countries most affected by COVID-19 and to keep them on track to SDG realisation.

As Jodie Keane concludes: “The international community must act now to ensure that this last decade of the SDGs is not a lost one.”

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