COVID-19 disruptions to international mobility drove a collapse in services trade. In the medium term, the OECD estimates that closing borders to passengers could increase services trade costs by an average of 12% across sectors and countries. Restoring safe cross-border mobility through internationally co-ordinated border health protocols and mutual recognition agreements is therefore crucial to a strong economic recovery.

Key messages
  • COVID-19 has dramatically disrupted international mobility: Border closures, visa restrictions, quarantine requirements and flight suspensions have played havoc with the cross-border movement of people.

  • Reduced mobility drove a collapse in services trade: The drop has been unprecedented in magnitude and has had economy-wide impacts.

  • Rising services trade costs loom in medium term scenarios: The OECD estimates that closing borders to passengers could increase trade costs by an average of 12% in the medium term across services sectors and countries. By restricting movement of people, travel bans increase delivery costs in all services sectors.

  • International co-ordination can restore safe cross-border mobility: The pace and the strength of the recovery will depend to a large extent on a rebound in the services sectors, underscoring the importance of co-ordinated border health protocols and mutual recognition agreements. International travel restrictions will need to be lifted as soon as sanitary conditions allow, and international co-operation in lifting these restrictions will further strengthen the economic recovery.

 COVID-19 dramatically disrupted international mobility

Almost all OECD countries and emerging-market economies introduced restrictions on the movement of people to contain the COVID-19 pandemic. Measures include border closures, visa restrictions, quarantine requirements, and flight suspensions.

The Oxford indicator of travel restrictions illustrates the extent and evolution of such measures domestically and internationally in 2020 (Figure 1), with the extent of restrictions more stringent for international than for domestic travels. More details on the indicator can be found in Hale et al. (2020[1])

Most restrictions on international travel are still in place. According to UNWTO (2020[2]), as of 1 November 2020, 70% of all destinations worldwide eased restrictions on international tourism. One hundred and eighteen destinations (54% of all destinations worldwide) have completely or partially closed their borders, with half of these completely closing their borders to international tourism.

Figure 1. Travel restrictions in OECD countries and key partners

Note: A higher value indicates a more restrictive regulation. The OECD average is computed using 23 countries. See (Hale et al., 2020[1]) for more details.

Source: Calculations using the Oxford database, https://ourworldindata.org/grapher/covid-stringency-index.

 Reduced mobility drove a collapse in services trade

Almost all countries experienced a fall in services imports and exports with the outbreak of COVID-19 (Figure 2). The drop was unprecedented in magnitude and more pronounced than during the global financial crisis. The impact was synchronised across countries, with variances in magnitude of the degree of openness, specialisation in services, and the stringency of the COVID-related measures. Disruptions in services supply have a broad economic and trade impact given the role of services in providing inputs for other economic activities, connecting supply chains, and facilitating trade in goods.

Figure 2. Collapse in services trade
Annualised month-on-month percentage change, average February to April 2020

Source: Calculations using balance of payments data

The steep reduction in services trade was driven by a crash in travel services (which captures expenditure on accommodation and hospitality) and transport services in the second quarter of 2020 (Figure 3). In addition to direct restrictions on international travel and behavioural changes, these activities were affected by further measures aimed at containing the COVID-19 pandemic. Quarantine requirements temporarily disrupted maritime transport and intensified border controls slowed down land transport (World Trade Organization, 2020[3]).

Figure 3. Sectoral decomposition of the collapse in trade
Contributions to the quarter-on-quarter change in the second quarter of 2020, percentage

Note: Data for China are for the first quarter.

Source: Calculations based on WTO data.

Travel restrictions and passenger behavioural changes caused by the COVID-19 crisis have also resulted in a dramatic drop in demand for passenger air transport services (OECD, 2020[4]). Although this sector accounts for a small share of OECD economies, it is a key enabler of many other economic activities. According to (IATA, 2020[5]), worldwide passenger air transport measured as revenue per passenger kilometre was on average down 90% year-on-year in April 2020 and down 75% in August.

Figure 4. Airline passenger traffic
Index 100 in January 2019

Source: Calculations using Official Airline Guide (OAG) data.

International travel restrictions were at the root of falling services exports and imports in February and March 2020 (Figure 5). In subsequent months, the global economic downturn, demand shortfalls, domestic restrictions (in particular, lockdowns), and rising uncertainty further compounded the impact on services trade. In some cases, however, an increase in online shopping and digital services may have compensated for the drop experienced in the travel and transport sectors.

Figure 5. Main factors explaining the collapse in services exports

Note: Services exports growth rates are not annualised. Services imports growth and contributions are very similar to what is observed for services exports in most of the 27 countries examined.

Source: Calculations using monthly services trade and Oxford data.

Countries with a particularly large reduction in services exports simultaneously display a low share of employment in jobs that could be performed via teleworking arrangements (Figure 6). Conversely, most economies that have experienced a reduction of services exports of less than 30% seem to benefit from a relatively high capacity to implement teleworking arrangements.

Figure 6. Countries with a greater capacity to telework experienced a smaller decline in services exports

Note: The measure of feasibility of teleworking is calculated by Espinoza and Reznikova (2020[6]) and based on the OECD Survey of Adult Skills. It incorporates detailed information on 12 characteristics of workers’ skills and tasks, including the intensity of the use of information and communications technology (ICT).

Source: Calculations based on WTO data and Espinoza and Reznikova (2020[6]).

 Rising services trade costs loom in medium-term scenarios

Face-to-face interactions and in-person meetings are important determinants of trade, technology transfer and innovations, explaining the prevalence of business travel (Coscia, Neffke and Hausmann, 2020[7]; Söderlund, 2020[8]; Hovhannisyan and Keller, 2014[9]; Li, 2014[10]). Restrictions to international travel also hamper foreign workers’ access to labour markets.

OECD estimates suggest that closing borders to passenger travel could increase trade costs by an average of 12% in the medium term across services sectors and countries (Figure 7). Those estimates capture the costs of delivering services across borders but do not account for the drop in demand. They also do not cover the tourism sector. About 60% of these increases in trade costs result from measures that restrict the movement of business travellers. Limitations on the entry of foreign service providers account for one-third, with the remainder resulting from sector-specific measures. By restricting international movement of people, travel bans have a broader impact than their direct effect on tourism and also increase the delivery cost in all services sectors.

Figure 7. Estimates of trade cost increase

Source: Benz, Gonzales and Mourougane (2020[11]).

 Restoration of safe international mobility is key to recovery

Disruptions to international mobility have played a key role in the services trade collapse. Restrictions on the movement of people further disrupt supply chains that rely on air, maritime, and land transport services. Restrictions on business travel hamper the development of personal relationships and technology transfers. Restoring safe international mobility is therefore crucial to mitigating the economic and social costs of COVID-19 and ensuring a resilient recovery.

For the G7 countries, preliminary OECD estimates suggest that lifting restrictions to international travel unilaterally at the start of 2021, everything else being unchanged, could increase services exports levels by around 5% on average and imports by 3% in 2021. If restrictions are lifted through international co-ordination the effect could be boosted by a factor close to 2. Ending other restrictions and boosting confidence and demand would also contribute to a recovery in services trade.

Essential workers, such as health or transport workers, are usually exempt from direct travel restrictions. Although the definition of essential workers varies across countries, there is broad recognition that these workers should be able to cross borders freely in order to prevent further disruptions during the pandemic. In some countries, the hospitality and personal care sectors rely disproportionately on migrants. Similarly, a well functioning maritime trade is essential to provisioning firms and to keeping supply chains open. This requires that changeovers of ship crews are allowed.

Essential workers remain subject to a number of health protocols, including mandatory quarantine periods and COVID-19 test requirements, to limit the spread of the virus. In March 2020, the European Commission published some guidance, including on health screening, to ensure that EU workers in critical occupations could reach their workplace (EU Commission, 2020[12]). In particular, the Commission urged Member States to establish specific burden-free and fast procedures for border crossings for a regular flow of frontier and posted workers to ensure a smooth passage.

However, rules and regulations related to health protocols differ widely across countries. The design of quarantine rules have not been co-ordinated across countries, raising informational costs and leading to a slowing down ‒ and sometimes a blockage ‒ of some travel activities. This issue has been raised frequently during OECD consultations with business federations and individual firms, and was highlighted by Business at OECD (BIAC, 2020[13]). By the end of May 2020, most OECD countries imposed a quarantine period of typically 14 days for people allowed to enter, with the exception of a few countries such as Sweden (OECD, 2020b[14]). The quarantine is limited to 7 days in Slovenia, and ten days in Norway and Switzerland (for those with symptoms or arriving from particularly affected regions). Self-quarantine is the norm, but some countries impose stricter rules with geo-localisation applications (Korea) or mandatory quarantine at the port of entry (e.g. Australia and Japan). In October 2020, EU Member States adopted a Council Recommendation on a co-ordinated approach to the restriction of free movement in response to the COVID-19 pandemic. It calls in particular for co-ordinated efforts to provide greater clarity on the measures applied to travellers from high-risk areas in terms of testing and self-quarantine.

The international co-ordination of health standards and protocols (e.g. mutual recognition of antigen test results obtained in accordance with certain standards) would revitalise the restoration of safe international mobility, revitalise services trade, and boost economic recovery.


[11] Benz, S., F. Gonzales and A. Mourougane (2020), “The impact of COVID-19 international travel restrictions on services-trade costs”, OECD Trade Policy Papers, No. 237, OECD Publishing, Paris, https://dx.doi.org/10.1787/e443fc6b-en.

[13] BIAC (2020), Key messages on the impact of COVID-19 international travel restrictions on services-trade costs, http://biac.org/wp-content/uploads/2020/06/KM-TAD-2020-03-FIN-COVID-19-international-travel-restrictions-on-services-trade-costs-public-1.pdf.

[7] Coscia, M., F. Neffke and R. Hausmann (2020), “Knowledge diffusion in the network of international business travel”, Nature Human Behaviour, Vol. 4/10, pp. 1011-1020, http://dx.doi.org/10.1038/s41562-020-0922-x.

[6] Espinoza, R. and L. Reznikova (2020), “Who can log in? The importance of skills for the feasibility of teleworking arrangements across OECD countries”, OECD Social, Employment and Migration Working Papers, No. 242, OECD Publishing, Paris, https://dx.doi.org/10.1787/3f115a10-en.

[12] EU Commission (2020), Guidelines concerning the exercise of the free movement of workers during COVID-19 outbreak, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0330(03)&from=EN.

[1] Hale, T. et al. (2020), Oxford COVID-19 Government Tracker, Blavatnik School of Government, http://www.bsg.ox.ac.uk/covidtracker.

[9] Hovhannisyan, N. and W. Keller (2014), “International business travel: An engine of innovation?”, Journal of Economic Growth, Vol. 20/1, pp. 75-104, http://dx.doi.org/10.1007/s10887-014-9107-7.

[5] IATA (2020), Air passenger market analysis, June 2020, https://www.iata.org/en/iata-repository/publications/economic-reports/air-passenger-monthly-analysis---june-20202/.

[10] Li, P. (2014), “Global temporary networks of clusters: Structures and dynamics of trade fairs in Asian economies”, Journal of Economic Geography, Vol. 14/5, pp. 995-1021, http://dx.doi.org/10.1093/jeg/lbu009.

[15] Mourougane, A., A. Jaax and F. Gonzales (2020), “Key factors explaining the services trade collapse in the wake of the COVID-19 crisis”, OECD Trade Policy Paper, forthcoming, OECD Publishing, Paris.

[4] OECD (2020), COVID-19 and the aviation industry: Impact and policy responses, OECD Policy Brief, http://www.oecd.org/coronavirus/policy-responses/covid-19-and-the-aviation-industry-impact-and-policy-responses-26d521c1/.

[14] OECD (2020b), Managing international migration under COVID-19, OECD Policy Brief, http://www.oecd.org/coronavirus/policy-responses/managing-international-migration-under-covid-19-6e914d57/#section-d1e175.

[8] Söderlund (2020), The impact of travel restrictions on trade during the COVID-19 pandemic, VoxEU, N°4 November, https://voxeu.org/article/impact-travel-restrictions-trade-during-covid-19.

[2] UNWTO (2020), 8th Report on international travel restrictions, https://webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020-12/201202-Travel-Restrictions.pdf.

[3] World Trade Organization (2020), Report on G20 trade measures, mid-May 2020 to mid-October 2020, https://www.wto.org/english/news_e/news20_e/report_trdev_nov20_e.pdf.


Annabelle MOUROUGANE (✉ annabelle.mourougane@oecd.org)

Alexander JAAX (✉ alexander.jaax@oecd.org)

Frederic GONZALES (✉ frederic.gonzales@oecd.org)