Global trade, devastated by the coronavirus crisis, will shrink by less than expected this year but the rebound will also be much weaker than previously forecast, the WTO said Tuesday.
Revising its prior “optimistic scenario” forecast of at least a 12.9-percent contraction in 2020, the World Trade Organization said it now expected global trade to shrink by just 9.2 percent this year.
But it will then grow by only 7.2 percent next year, rather than the previous 21.3 percent estimate issued in April, the WTO added.
“World trade shows signs of bouncing back from a deep, COVID-19-induced slump, but WTO economists caution that any recovery could be disrupted by the ongoing pandemic effects,” the global trade body said in a statement.
It further warned that the pace of trade expansion could slow sharply once pent-up demand is exhausted and business inventories have been replenished.
More negative outcomes were also possible if there is a resurgence of the coronavirus between now and the end of the year, it said.
Global gross domestic product (GDP) will fall by 4.8 percent in 2020 before rising by 4.9 percent in 2021, the WTO forecast.
“Consensus estimates now put the decline in world market-weighted GDP in 2020 at minus 4.8 percent compared to minus 2.5 percent under the more optimistic scenario outlined in the WTO‘s April forecast,” the organisation said.
“GDP growth is expected to pick up to 4.9 percent in 2021, but this is highly dependent on policy measures and on the severity of the disease.”
– Lockdown risk to growth –
WTO deputy director-general Yi Xiaozhun said a resurgence of Covid-19 requiring new lockdowns could reduce global GDP growth by two to three percentage points, and shave up to four percentage points off of merchandise trade growth in 2021.
“The incidence of Covid-19 worldwide has fallen from a peak in the spring, but it remains stubbornly high in many areas,” Yi told reporters at the WTO‘s headquarters in Geneva.
“Trade has played a critical role in responding to the pandemic, allowing countries to secure access to vital food and medical supplies.
“One of the greatest risks for the global economy in the aftermath of the pandemic would be a descent into protectionism.”
The WTO said that the rapid deployment of an effective vaccine against the virus could boost confidence and raise output growth by one to two percentage points in 2021.
“This would add up to three percentage points to the pace of trade expansion,” it said.
The coronavirus has killed nearly 1.05 million people while at least 35.5 million cases have been registered since the outbreak emerged in China last December, according to a tally from official sources compiled by AFP.