A report published yesterday by the World Trade Organisation (WTO) says that world trade is expected to fall by up to 32% this year due to the disruption of economic activity caused by the Covid-19 pandemic.
WTO economists predict the decline, which it says will range anywhere from 13% to 32%, will most likely be greater than the slump in trade during the global financial crisis of 2008.
Roberto Azevêdo, WTO director-general, said: “This crisis is first and foremost a health crisis which has forced governments to take unprecedented measures to protect people’s lives. The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself.”
The report predicted that nearly all regions will suffer double-digit declines in trade volumes, with reports from North America and Asia hit hardest. In terms of sectors, the biggest falls are likely to be in areas with complex value chains such as electronics and automotive products.
Azevêdo said the immediate goal is to bring the pandemic under control, but also urges policymakers to start planning for the aftermath of the pandemic.
While the WTO expects a recovery in 2021, the strength of the recovery is uncertain and outcomes will depend largely on the duration of the outbreak and the effectiveness of the policy responses.
“These numbers are ugly – there is no getting around that. But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. We need to lay the foundations for a strong, sustained and socially inclusive recovery. Trade will be an important ingredient here, along with fiscal and monetary policy. Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical to spur the renewed investment we will need. And if countries work together, we will see a much faster recovery than if each country acts alone,” Azevêdo said.