Global trade is expected to drop around 18.5 percent year on year in the second quarter of 2020 in a coronavirus driven plunge which could have been much worse, the World Trade Organization (WTO) said in a release on Tuesday.
The Geneva-based body forecast in April that global trade in goods would fall by between 13 and 32 percent in 2020, numbers that the WTO chief described as "ugly," before rebounding by 21 to 24 percent in 2021.
The WTO did not set new figures on Tuesday, but said rapid responses by governments meant its pessimistic scenario for this year was unlikely.
Source: WTO/UNCTAD and WTO Secretariat estimates.
"Initial estimates for the second quarter, when the virus and associated lockdown measures affected a large share of the global population, indicate a year-on-year drop of around 18.5 percent," the WTO said in a statement.
"The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse," said WTO director‑general Roberto Azevedo.
The WTO said governments had reacted quicker than in the 2008-2009 crisis and income support had encouraged consumers to keep spending. Some sectors such as automobiles had fallen sharply, but others such as electronics had held up well.
If trade were to grow by 2.5 percent per quarter for the rest of the year, the more optimistic projection of minus 13 percent could be met, though that would still be worse than at the height of the financial crisis in 2009, when trade dropped by 12.5 percent.
Source: WTO Secretariat, International Monetary Fund, World Bank, Organisation for Economic Cooperation and Development, Federal Reserve Bank of Philadelphia, European Central Bank.
However, the WTO said weaker-than-expected growth, wider trade restrictions and a possible second wave of infections could see a 2021 rebound falling short.
"Policy decisions have been critical in softening the ongoing blow to output and trade, and they will continue to play an important role in determining the pace of economic recovery. For output and trade to rebound strongly in 2021, fiscal, monetary, and trade policies will all need to keep pulling in the same direction," Azevedo said.
(With input from agencies)
(Cover via CFP)