ًWTO : Trade falls steeply in first half of 2020
World trade fell sharply in the first half of the year because the Covid-19 pandemic upended the global economy. However, rapid government responses helped temper the contraction, and World Trade Organization (WTO) economists now believe that while trade volumes will register a steep decline in 2020, they are unlikely to reach the worst-case scenario projected in April.
The volume of merchandise trade shrank by three percent year‑on‑year in the first quarter according to WTO statistics. 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. These declines are historically large, but could have been much worse.
The WTO’s April 20 annual trade forecast – in light of the large degree of uncertainty around the pandemic’s severity and economic impact – set out two plausible paths: a relatively optimistic scenario in which the volume of world merchandise trade in 2020 would contract by 13 percent, and a pessimistic scenario in which trade would fall by 32 percent. As things currently stand, trade would only need to grow by 2.5 percent per quarter for the remainder of the year to meet the optimistic projection. However, looking ahead to 2021, adverse developments – including a second wave of Covid‑19 outbreaks, weaker-than-expected economic growth, or widespread recourse to trade restrictions – could see trade expansion fall short of earlier projections.