The coronavirus pandemic could cause a deeper collapse in international trade flows than at any time in the post-war era, the World Trade Organization (WTO) said.
The Geneva-based trade body presented two possible scenarios for global trade in the years to come in a report published on Wednesday (08.04.2020), noting that the unprecedented nature of the health crisis could lead to a wide range of outcomes.
In a optimistic scenarioThe WTO said global merchandise trade could fall by 13% in 2020 and rebound by 21% in 2021, compared with a contraction of 0,1% in 2019. Under the optimistic scenario, gross domestic product could contract by 2,5% in 2020 and grow by 7,4% in 2021.
In a pessimistic case, the volume of global trade in goods could fall by up to 32% this year with the possibility of a 24% increase next year. In this scenario, global GDP could shrink by up to 8,8% in 2020 and expand by 5,9% in 2021.
Chart: Relationship between global merchandise trade growth and global GDP growth, 1990–2020.
Percentage variation and relationship
If the optimistic scenario is achieved, the WTO projection will rival the modern peacetime record, which was established in 2009, when the volume of world merchandise trade fell by about 12% and global GDP contracted by 2%. If the pessimistic scenario comes to fruition, it could be the steepest drop in global trade since the Great Depression..
«These numbers are ugly, there is no way around that.“WTO Director-General Roberto Azevedo said in a statement.But a rapid and vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. «.
The forecasts underscore the fact that the world is witnessing a unique health and economic crisis, the likes of which have not been seen in at least a generation.Globally, more than 80,000 people have died from Covid-19 and the number of global infections will soon exceed 1.5 million.
The health crisis has forced the world’s largest economies to tell their citizens to stay home and close retail establishments, factories and other non-essential services to help suppress the spread of the disease. The life-saving measures have triggered a simultaneous supply and demand shock that has snarled global production and logistics networks and hit consumption of retail goods, travel and hospitality services.
Trade in services, which is not included in the WTO's merchandise trade forecast, may be the component of world trade most directly affected by Covid-19. and the transport and travel limits it is causing, the report said. Some declines in services trade during the pandemic may be lost forever.
Chart: Growth in the value of commercial services exports by category, 2015-2019.
Percentage change in US dollars
Regional impact
«Almost all the regions will suffer a double-digit decline in trade volumes in 2020, with exports from North America and Asia most affected," the WTO said.
Chart: Merchandise exports and imports, by region, 2015Q1-2019Q4.
(Volume index, 2015Q1 = 100)
According to the report, Trade will fall most sharply in industries characterized by complex value chain linkages, such as electronics and automotive products..
A strong rebound is more likely if businesses and consumers view the pandemic as a temporary, one-off shock, the WTO said.
“In this case, spending on investment goods and consumer durables could resume at near-previous levels once the crisis subsides,” he said. “On the other hand, if the outbreak is prolonged and/or recurrent uncertainty becomes widespread, households and firms are likely to spend more cautiously.”
Trade collapses in the face of the COVID-19 pandemic, which is disrupting the global economy #WTOforecast #WTOstats #GlobalTrade https://t.co/8grZ9ul9XZ pic.twitter.com/tSzXREx8yK
— WTO in Spanish (@OMC_es) April 8, 2020
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