The World Trade Organization (WTO) is predicting a severe decline in international commerce this year, with a rebound of 21-24% in 2021.
The Geneva-based WTO forecast yesterday a plunge in global trade in goods this year of between 13% and 32% due to the COVID-19 pandemic before a likely rebound in 2021.
The WTO gave a wide range for the decline this year, of between 13% and 32%, saying there remained uncertainty about the economic impact of the unprecedented health crisis.
For 2021 it was forecasting a rebound of between 21% and 24%, with the outcome depending largely on the duration of the outbreak and the effectiveness of policy responses.
WTO economists believe the decline will likely exceed the trade slump brought on by the global financial crisis of 2008-09.
The WTO’s director general Roberto Azevedo described the figures as “ugly”. But acknowledged that “a rapid, vigorous rebound is possible.”
Trade was already slowing in 2019 before the virus struck, weighed down by “persistent trade tensions” and slowing economic growth. A reference that to a large extent reflects the confrontational approach to international commerce taken by the administration of President Trump.
A decline of 13% in trade in goods is described in the report as a relatively optimistic scenario. It reflects a steep drop in trade followed by a recovery starting in the second half of 2020.
A strong rebound is more likely if businesses and consumers view the pandemic as a temporary, one-time shock.
In this case, spending on investment goods and consumer durables could resume at close to previous levels once the crisis abates.
Mr Azevedo said trade would be an important ingredient in the economic recovery after the crisis. He said keeping markets open and predictable would be critical.