World trade is likely to fall by between 13% and 32% this year as the Covid-19 pandemic disrupts economic activity and life around the world, the World Trade Organisation (WTO) reports.
The global body believes the slump in trade will be even worse than what was brought on by the global financial crisis in 2008/9.
The WTO is also uncertain of the recovery trajectory in 2021, with outcomes largely dependent on the duration of the outbreak and the effectiveness of policy responses around the world.
"The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself.
“The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policymakers must start planning for the aftermath of the pandemic,” asserts WTO director-general Roberto Azevêdo.
Azevêdo adds that governments globally need to lay the foundations for a strong, sustained and socially inclusive recovery, and in this, trade will be an important ingredient, along with fiscal and monetary policy.
He says it is necessary to keep markets open and predictable, as well as to foster a more generally favourable business environment to spur renewed investment.
The WTO says trade was already slowing in 2019 before the virus struck, owing to trade tensions and general slowing economic growth.
World merchandise trade registered a slight decline for the year of 0.1% in volume terms after having risen by 2.9% in the previous year. Meanwhile, the dollar value of world merchandise exports in 2019 fell by 3% to $18.8-trillion.
In contrast, world commercial services trade increased in 2019, with exports in dollar terms rising by 2% to $6-trillion. The pace of expansion was slower than in 2018, when services trade increased by 9%.
The WTO further points out that trade levels have never recovered to pre-2008/9 growth levels.
A strong rebound after Covid-19 passes is more likely if businesses view the pandemic as a temporary, one-time shock, it suggests.
If the pandemic is brought under control and trade starts to expand again, most regions have the potential to record double-digit rebounds in trade growth in 2021 of around 21%, the WTO notes.