“Impact of COVID-19 Pandemic on Macedonian Trade in Goods and Services”

Abstract

The global economy faced severe repercussions from the COVID-19 pandemic, encompassing disruptions of economic activity, trade and supply chains. This adverse shock was quickly spilled over into the Macedonian economy. This paper reviews the developments in Macedonian trade in goods and services since the COVID-19 outbreak early in 2020. Data for 2020 point to a contraction in trade openness, amid a drop in both exports and imports, which is due to several channels. Disruptions in GSC and restrictions imposed in the international and domestic economy affected the outturn of export-oriented facilities in the automotive industry, leading to the steepest decline of exports of goods in the second quarter of 2020. The simultaneous drop of imports was impacted by exports decline, depressed domestic demand, and a fall in energy prices. The gradual easing in global conditions and the lifting of restrictive measures prompted the re-establishment of GSC and rebound of exports, evident in the data for the first half of 2021. Effects of the pandemic were also visible in the services trade, particularly travel and telecommunications, computer and information services. After the decrease in 2020, data on services trade point to increase of its surplus in the first half of 2021. Albeit the negative repercussions of the pandemic on Macedonian trade were believed to be temporary, the pandemic worldwide has prolonged outturn. This, as well as new upward shifts of the prices of essential goods on international markets, transportation insufficiencies as the weakest link of the GSC and the rise of transportation costs, make economic authorities reconsider their initial claims and impose a need of proposing additional measures on amortization of new, unavoidable international and national shocks.