Timely information on changing patterns of trade is pivotal in times of increasing trade tensions, frequent policy changes, and supply chain disruptions. Aggregate trade figures, which are regularly monitored for the purposes of macroeconomic surveillance, provide an indication of the broad direction of changes. However, they mask large and informative changes in the structure of trade at the level of specific traded products and trading partners. Using granular data on products, services and trading partners, OECD reports go beyond macro-economic trends and broad product groupings to provide key insights into trade developments of products and services, the importance of which differs between countries.
Monitoring international trade
The recent shocks to the global economy have underscored the need for timely and detailed information on changing patterns of trade. Monitoring developments of goods and services trade and commodity markets in the wake of these disruptions is designed to inform global trade policy discussions and guide responses to shocks.
Key messages
Potential disruptions to key commodities and supply networks, stemming from recent geopolitical tensions such as Russia's invasion of Ukraine, highlight the importance of understanding trade dependencies and trade exposure within supply chains and making a preliminary assessment of the wider economic effects of trade disruptions.
The product structure of international trade has changed significantly following the COVID-19 pandemic and Russia’s invasion of Ukraine. More time and data will be needed to see whether there will be long-term changes, but for now the data shows that only some of the changes observed during these periods of disruption have been reversed.
Context
The product structure of international trade has changed significantly since 2020, with some changes suggesting lasting adjustments
The product structure of international trade has changed significantly since 2020 based on the Finger-Kreinin measure of similarity. At present, the data shows that only some of the changes observed in 2020 were reversed in 2021, and that in 2021 the composition of trade continued to differ from what was observed in 2019. This is not surprising given that the changes wrought in a single year to the merchandise trade structure by the COVID-19 pandemic were of a similar magnitude to changes typically seen over a period of five to seven years; the changes to the structure of services trade were even larger. Overall, while the big and mostly negative changes occurred in 2020, the structure of both goods and services trade in 2021 were far different to what existed in 2019.
The physical distance of imports has increased, but the geopolitical distance has been stable
As global value chains have grown in importance, production stages have expanded to more cost-efficient, and often more remote, locations. In recent years, however, growing geopolitical tensions and concerns about security and potential supply chain disruptions have heightened calls to bring production closer to home. Nevertheless, although the physical distance of imports has increased over the last 16 years, and not all it of due to China being an increasing source of imports, the average geopolitical distance of trade has been stable.
