The head of the WTO, Roberto Azevêdo, has estimated that “the decisions implemented have been essential to mitigate the blow to production and trade”.
June 23, 2020 8h54
World trade is expected to get by better than expected according to the WTO
GENEVA — The international trade should be recorded in the second quarter a historical perspective because of the pandemic of the COVID-19, but it will be less strong than feared, thanks to measures to support the economy, according to the world trade Organization (WTO).
According to the latest statistics from the WTO, the volume of merchandise trade fell 3 % year-on-year in the first quarter. The first estimates for the second quarter, a period during which the virus and the containment measures associated have affected a large portion of the world’s population, have a drop of approximately 18.5 %.
“The fall of the trade that we are witnessing today is unprecedented in scope, this would in fact be the strongest ever recorded,” said the director-general of the WTO, Roberto Azevêdo, was quoted in a press release.
“But there is still an aspect comforting: it could have been much worse. This is a new really positive, but we cannot afford to relax our efforts”, he added.
The head of the WTO has estimated that “the decisions implemented have been essential to mitigate the blow to production and trade”.
The WTO stresses that fiscal and monetary policies appear to have been deployed more rapidly and on a larger scale during the current crisis than during the financial crisis of 2008-2009, and that they may have encouraged consumers to maintain their consumption.
In addition, notes the organization, the decline in production has been focused on the services are non-tradable such as accommodation, personal services and leisure, which tend to have less impact on trade.
“Hit the bottom”
The relaxation of the measures of social distancing and restriction on travel and transport are reflected already in a variety of economic indicators which, taken together, suggest, according to the WTO that “trade may have hit bottom in the second quarter of 2020”.
After a decline of almost three-quarters (-74 %) between early January and mid-April, the commercial flights, ensuring a significant volume of international air cargo, have thus risen to 58% until mid-June. The traffic of container ports also seems to save a partial recovery in June compared to the month of may, also within the WTO.
At the same time, the indices of new export orders have also started to recover in may, after declines in April.
The forecast annual trade made by the WTO on April 20, mentioned the two trajectories are plausible: a scenario is a relatively optimistic, in which the volume of world merchandise trade by 2020 is set to contract by 13 % and a pessimistic scenario in which it would fall by 32 %.
“We are currently on track for the most optimistic scenario. If trade volumes are rebounding to a relatively low level of 2.5% per quarter during the rest of the year, then the total decline to 2020 is expected to be approximately 13 %, ” said Roberto Azevedo, in a video message.
In the perspective of 2021, the WTO had estimated in April that if the pandemic is under control and if the trade returns to the road, most areas may record a recovery of around 21 % to 24 %.
The WTO has not updated Tuesday its forecasts for 2021, but warns that “adverse circumstances, for example a second wave of the COVID-19, weaker economic growth than expected or a widespread use of trade restrictions, could lead to an expansion of trade, lower than the projections”.