The Covid-19 crisis led to a collapse in trade flows -- both exports and imports. Supply chain disruptions and weak consumer demand played a major role. Dollar movements will define whether international trade will boost or weigh on GDP going forward. The U.S. appears to be lagging behind other countries in containing the virus.
A weaker currency could prompt export growth, while declines in personal income in the absence of adequate fiscal support can weaken imports. A shrinking trade deficit may contribute modestly to economic growth early in the expansion. Resurgent risk appetite weakened the currency after the 2008 recession, prompting strong exports growth. This culminated with net trade contributing 22 basis points to GDP growth in 2013.
A weaker currency could prompt export growth, while declines in personal income in the absence of adequate fiscal support can weaken imports. A shrinking trade deficit may contribute modestly to economic growth early in the expansion. Resurgent risk appetite weakened the currency after the 2008 recession, prompting strong exports growth. This culminated with net trade contributing 22 basis points to GDP growth in 2013.