The World Trade Organization (WTO) revised upwards on Tuesday (06.10.2020) its forecast of a decline in global merchandise trade in 9,2% in 2020, against a 12,9% drop previously projected, based on strong business performance in June and July as lockdowns eased and economic activity accelerated.
“The WTO now forecasts a 9,2% decline in the volume of world merchandise trade for 2020, followed by a 7,2% increase in 2021…. The strong trade performance in June and July has brought some signs of optimism for overall trade growth in 2020,” the Geneva-based organization said in a statement. report.
The forecast for next year is more pessimistic than the previous estimate of 21,3% growth, leaving merchandise trade well below its pre-pandemic trend in 2021.
"The current trade forecast of 7,2% for 2021 appears to be closer to the 'weak recovery' scenario than a 'rapid return to trend,'" the WTO said.
However, He warned that these estimates are subject to an unusually high degree of uncertainty, as they depend on the evolution of the pandemic and government responses to it..
"There is limited recovery potential if a vaccine or other medical treatments prove effective, but their impact would be less immediate," he said.
In April, the WTO laid out two possible scenarios for global trade. In an optimistic scenario, it said global merchandise trade could fall by 13% in 2020 and rebound by 21% in 2021. In a pessimistic case, the volume of global goods trade could fall by as much as 32% this year with the possibility of a 24% increase next year. It had also said the decline is likely to exceed the trade slump triggered by the 2008-09 global financial crisis.
However, Today, the WTO said that although the decline in trade during the Covid-19 pandemic is similar in magnitude to the 2008-09 global financial crisis, it noted that the economic context is different and the GDP contraction has been much stronger. in the current recession, while the decline in trade has been more moderate.
“The volume of global merchandise trade is expected to decline by about twice as much as global GDP at market exchange rates, rather than six times as much during the 2009 crash,” he said.
future risks
The pace of expansion could slow sharply once pent-up demand is exhausted and trade inventories are replenished, the report said. The 14,3% quarter-on-quarter decline in global merchandise trade in the second quarter is the largest on record, but high-frequency data point to a partial recovery in the third quarter.
El Covid-19 resurgence requiring more lockdowns could reduce global GDP growth by 2 to 3 percentage points next year. Other downside risks include a Uncertain outlook for fiscal policy and labor markets challenging in many countries. Together, these risks could shave up to 4 percentage points off global merchandise trade growth in 2021. On the other hand, the Rapid deployment of an effective vaccine could boost confidence and increase output growth by 1-2 percentage points in 2021
“One of the biggest risks for the global economy after the pandemic would be a fall into protectionism. International cooperation is essential for us to move forward, and the WTO is the ideal forum to resolve any outstanding trade issues arising from the crisis,” said Deputy Director-General Yi Xiaozhun.
It is anticipated that Latin American exports contract by 7,7% in 2020 before growing by 5,4% in 2021, while the projection for the imports is -10,3% and 8,7%, respectively.
The fall of the trade in services during the pandemic was at least as strong as the decline in merchandise trade. Trade in agricultural products fell less than the world average in the second quarter (5%), while the decline in trade in manufactured goods (-19%) was comparable to the decline in trade in goods in general.
Trade in other types of electronic goods also held up during the crisis, as households, businesses and governments upgraded computers and information technology infrastructure to make work easier.
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