Photo: Charly Tribaleau agence france-presse
World trade could fall between 13 and 32% in 2020 according to the scenario likely or pessimistic, warns the world trade Organization.
The deterioration observed by the world trade Organization (WTO) is evidence of this rise of protectionism in the era of Trump and post-Brexit while measuring the impact of tensions and galvanized by this trade war between the two largest economic powers. The COVID-19 will be amplified in the movement by accelerating the remodelling of supply chains is already in progress.
The data are revealing. World trade could fall by 13 to 32% in 2020 according to the scenario likely or pessimistic, notifies the WTO. The first provides for a net decline in the trade followed by a recovery from the second half of 2020. The most pessimistic is structured around an initial decline in stronger and the recovery more prolonged and incomplete. And the director-general Roberto Azevedo to add that, regardless of the assumption chosen, the pandemic of sars coronavirus puts us ” in the face of what could be the most severe recession or the more serious economic downturn of our existence.”
All regions are expected to experience a decline in trade, in the double digits for almost the entire, experience more severe is expected in North America and Asia, with a decline in exports of 40 and 36 %, respectively, according to the most pessimistic scenario.
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The report recalls that the trade are fading already in 2019, leaded by the trade tensions and the slowdown in economic growth. The global trade in goods has recorded a contraction of 0.1 % in volume last year, after rising 2.9 % in the previous year, says the WTO in its report published Wednesday.
As for the projections, ” most of the areas could save in 2021 to a recovery in the two figures of around 21 % in the optimistic scenario and 24 % in the worst-case scenario “. But the magnitude of the uncertainty is very high, ” it is quite possible that the results are higher or lower than these figures in 2020 as well as 2021 “.
The WTO pointed to a major component of the current crisis that the services trade is directly affected because of the restrictions imposed in the areas of transportation and travel and closing of many retail establishments and accommodation. “Unlike goods, there are no inventories of services, in which we might draw today, and which could be reconstituted later. The decreases in trade in services during the pandemic could be lost forever.
Securing the supply chain
Another particular element emerges and focuses on the role of value chains, already modified by the trade war between china and the united states. “The disruption of the value chains was already a problem when the COVID-19 was essentially limited to China. It remains a dominant factor, now that the disease is widespread. It is likely that the decline in the trade will be stronger in sectors characterized by complex value chains, including those of the electronic and automotive products, ” says the WTO.
But more fundamentally, the crisis of the COVID-19 is coming to shine the spotlight on issues of self-production and the securing of the supply, especially of essential commodities.
“The COVID-19 will also accelerate what has been initiated by the trade war between the United States and China : the end of an era in which most of the companies could concentrate a large part of their production activities in areas with the lowest costs. This means that companies will need to split their supply chains in several countries, a process that will be both long and costly, ” writes on Wednesday the analyst Angelo Katsoras, of the National Bank.
He gives the example of the supply chain in the health sector, rather shaken by the individualism observed in this pandemic. To remember that a choice must be made between security of supply and an increase in costs arising from the fragmentation of world production.