The World Trade Organization (WTO) Wednesday forecast up to 32% fall in the global trade this year as the coronavirus pandemic disrupts regular economic activity.
Addressing a virtual news conference, the WTO Director-General Roberto Azevedo said: “COVID-19 has completely upended the global economy and, with it, international trade.”
“Our economists see the volume of global merchandise trade falling by 13% this year compared to 2019. If the pandemic is not brought under control and governments fail to implement and coordinate effective policy responses, the decline could be 32% or even more,” he said.
The pandemic, Azevedo said, is “first and foremost a health crisis,” but also a major social and economic crisis which left millions of people around the world without job and income.
“Our forecast reflects the enormous ongoing shocks to supply and demand,” said the official who heads the body that regulates international commerce.
He was speaking at the launch of the WTO Annual Trade Statistics and Outlook Report and said that despite the “ugly” numbers, policymakers need to start planning for when the pandemic ends.
The WTO said nearly all regions will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest.
Trade will likely fall steeper in sectors with complex value chains, particularly electronics and automotive products.
WTO chief warns against protectionism
One factor determining the strength of the world’s recovery would be how quickly the pandemic is brought under control and the policy choices governments make.
“Now, a strong rebound is more likely if policymakers show businesses and households have reason to believe that the pandemic was a temporary one-time economic shock,” said Azevedo.
“A turn towards protectionism would introduce new shocks on top of those that we are currently enduring. Keeping markets open to international trade and investment would help economies and recover more quickly,” the WTO chief warned.
If the right policies are in place, trade and output could rebound nearly to their pre-pandemic trajectory as early as 2020, or next year, regardless of how steep the initial fall is, said Azevedo.
“The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies, and countries. But policymakers must start planning for the aftermath of the pandemic,” he said.
Urging countries to work together, Azevedo said that it was worth remembering that even before the first COVID-19 case was registered, the world was not making the most of trade potential to drive growth.
“To reverse this situation, governments around the world can and must lay the foundations for a strong and socially inclusive recovery. Trade and international coordination more generally will be important ingredients,” he said.
© Copyright Andolu Ajansi