The decline in world trade due to Covid-19 will likely exceed the trade slump brought by the global financial crisis of 2008 09, the World Trade Organization (WTO) said on Wednesday, with merchandise trade expected to decline 13-32% in 2020 due to the Covid-19 pandemic.
“These numbers are ugly – there is no getting around that,” said WTO Director-General Roberto Azevêdo.
For 2021, the organisation has forecast a rebound in global goods trade between 21- 24%, depending largely on the duration of the coronavirus outbreak and the effectiveness of policy responses. Estimates of the expected recovery in 2021 are equally uncertain, it said.
WTO economists believe the decline will likely exceed the trade slump brought on by the global financial crisis of 2008 09 as restrictions on movement and social distancing to slow the spread of the disease mean that labour supply, transport and travel are “today directly affected in ways they were not during the financial crisis”. Whole sectors of national economies have been shut down, including hotels, restaurants, non-essential retail trade, tourism and significant shares of manufacturing.
Keeping markets open and predictable, Azevêdo said, would be critical to spurring renewed investment. Countries working together would see a faster recovery than if each country acted alone.
As per the multilateral trade watchdog, nearly all regions will suffer double-digit declines in trade volumes especially North America and Asia where exports are expected to get hit the hardest. While electronics and automotive products sectors are likely to see steep declines, services trade may be most directly affected by the pandemic through transport and travel restrictions, it said.
The organisation also said that merchandise trade volume already fell 0.1% in 2019, weighed down by trade tensions and slowing economic growth. The dollar value of world merchandise exports in 2019 fell 3% to $18.89 trillion.
In October, the WTO forecast trade growth would grow 2.7% in 2020 after expanding 1.2% in 2019.
