WTO sees less severe global trade slump this year, weak rebound
- The WTO said it expects global merchandise trade to fall by 9.2% this year from 2019, compared with the 12.9% drop projected in April
- The WTO also expects global trade growth of 7.2% in 2021, much weaker than the prior outlook for a 21.3% bounce-back
The World Trade Organization offered a less gloomy projection for this year’s decline in global trade while noting that downside risks remain if resurging outbreaks of Covid-19 stall the economic recovery.
The WTO said it expects global merchandise trade to fall by 9.2% this year from 2019, compared with the 12.9% drop projected in April, according to revised forecasts released Tuesday in Geneva. But the WTO also said it expects global trade growth of 7.2% in 2021, much weaker than the prior outlook for a 21.3% bounce-back.
A deeper slump has been avoided this year because of a surge in cross-border commerce in June and July after lockdowns were eased, medical supplies met with high demand and global economic activity accelerated.
The WTO warned that the current forecast could slip if there’s a resurgence of coronavirus cases in the fourth quarter or if nations resort to trade protectionism. The more sluggish rebound means global trade will remain below its pre-pandemic trend through 2021, it said.
“Worse outcomes are still possible if there is a strong resurgence of the Covid crisis in the coming months,” Deputy Director-General Yi Xiaozhun said during a press conference in Geneva. “One of the greatest risks for the global economy in the aftermath of the pandemic would be a descent into protectionism.”
The projections come as the summer’s nascent rebound in economic activity has begun to cool with the emergence of a second wave of infections in parts of Europe and the U.S.
Europe has struggled to keep the pandemic in check and Covid-19 cases in Germany are rising by the most since the initial wave hit in April. The U.K. government, meanwhile, has urged workers to stay home and announced tougher restrictions aimed at preventing an acceleration of infections.
US recovery
The pace of America’s economic recovery is flagging, too, as job growth slowed and the virus spreads across much of the country. The economic pain may continue as long as U.S. lawmakers remain at loggerheads over a fresh government aid package.
The WTO said monetary and fiscal policies have helped prop up incomes and allowed consumption and imports to rebound once lockdowns were eased.
“Fall and winter holds a lot of uncertainty,” WTO Chief Economist Robert Koopman said.
“Asian exports have been strong but for those exports to be maintained you need strong demand,” he said. “Much depends on government stimulus.”
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First Published:6 Oct 2020, 06:48 PM IST
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