Covid trade drop limited to 9.2% in 2020, WTO estimates

By Isabel Saco

Geneva, Oct 6 (efe-epa).- Global trade is showing signs of recovery amid the deep economic crisis caused by the Covid-19 pandemic and is expected to end the year with a fall of 9.2 percent instead of 12.9 percent estimated six months ago, according to the World Trade Organization.

Trade volume is expected to grow by 7.2 percent in 2021, meaning that by the end of next year it will still not have returned to where it was before the outbreak, according to a WTO report released Tuesday.

The organization predicted the global GDP will fall by 4.8 percent this year and increase next year by 4.9 percent.

If the spread of the virus is controlled and the drop is limited to 9.2 percent as predicted, it will mean ending 2020 in the most positive scenario that was contemplated in April.

The recovery expected in 2021 is only a third of the 21.3 percent calculated in April meaning the prevailing scenario for the near future is one of “weak recovery”.

WTO deputy director-general Xiaozhun Yi warned that a resurgence in the virus that requires new restrictions could reduce global GDP growth by two to three percentage points and put a four percent dent in the growth in merchandise trade expected in 2021.

International trade could be largely sustained thanks to demand for medical supplies, electronic devices and technological goods.

Demand for the latter two items increased in the first half of the year.

“Trade has played a critical role in responding to the pandemic, allowing countries to secure access to vital food and medical supplies,” Yi said in a statement.

“Trade has also facilitated new ways of working during the crisis through the provision of traded IT products and services.”

Another sector that only suffered slightly was agriculture which contracted less than the world average in the second quarter, down by five percent, as food continued to be produced and exported even in the most strictly confined situations, the WTO said.

The automotive industry has registered a sharp decline with April its worst month down by 70 percent partly due to supply disruptions but also a lack of demand.

By June the sector had recovered to a level 26 percent lower than the previous year.

The negative impact of the pandemic on trade has not been comparable across regions, with a moderate decline of 6.1 percent in Asia but much more pronounced in Europe at 19.3 percent and North America at 14.5 percent.

Another unique feature of the current situation is that resource-exporting countries have been less affected in terms of the sale of their products abroad but have seen a considerable decline in their imports.

Yi said the WTO analysis only covers trade in goods and that trade in services has been the most affected by the health emergency, it is estimated to have fallen by 27 percent since February.

The worst performing services have been those linked to travel and transport, which are often an important source of income for many developing countries.

Yi warned that one of the greatest risks for the world economy in the post-Covid period would be a “descent into protectionism”.

“International cooperation is essential as we move forward, and the WTO is the ideal forum to resolve any outstanding trade issues stemming from the crisis,” he added.

Related Articles

Back to top button