Coronavirus: “The drop in world trade will be worse than the crisis of 2008”


A Chinese freighter

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Coronavirus Interrupted Many Global Deliveries

The World Trade Organization (WTO) predicts a sharp drop in international trade this year.

In a new report, the WTO forecasts a contraction of between 13% and 32% this year.

The wide range of possibilities reflects the uncertainties regarding the health crisis.

It says the impact on trade is likely to exceed the doldrums caused by the financial crisis just over a decade ago.

WTO director general Roberto Azevedo called the figures “ugly.”

“There is no way around this,” he said. He declared that the situation was above all a health crisis and he recognized that governments must take measures to protect people’s lives.

“The inevitable declines in trade and production will have painful consequences for households and businesses, in addition to the human suffering caused by the disease itself,” he added.

Relatively optimistic

A 13% drop in merchandise trade is described in the report as a relatively optimistic scenario. It reflects a sharp drop in trade followed by a recovery from the second half of 2020.

Of course, this should be based on substantial progress over the next few months to overcome the health crisis.

This is obviously not guaranteed, so the report includes a much more pessimistic case that reflects a larger initial decline and a more prolonged and incomplete recovery.

The report also warns that “the extent of the uncertainty is very high, and it is entirely possible that the results for 2020 and 2021 will be higher or lower than these results.”

World trade growth was already stalled by the end of last year, the report said. Merchandise trade in the last quarter of 2019 was 1% lower than a year earlier.

The WTO says this is the result of “persistent trade tensions,” a benchmark that largely reflects the adversarial approach to international trade adopted by the administration of President Donald Trump.

Azevedo said trade would be an important ingredient for economic recovery after the crisis. He said that keeping markets open and predictable would be essential.


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