The World Trade Organization (WTO) has forecast a 9.2% fall in the overall volume of trade in goods across the world this year alongside a 7.2% rise in 2021.
The trade body also observed that global trade is showing signs of bouncing back from a deep, Covid-19-induced slump with the caveat that any recovery could be badly disrupted by the future course of the pandemic and how societies react, reports UN News.
'High degree of uncertainty'
These estimates are subject to an "unusually high degree of uncertainty" as they depend on the evolution of the pandemic and response by governments, the global trade body added.
The projected decline is nonetheless not as severe as the "optimistic" 12.9% decline, the WTO had laid out in its April trade forecast. The pessimistic scenario was a fall of 32%.
"The performance of trade for the year, to date, exceeded expectations due to a surge in June and July as lockdowns were eased and economic activity accelerated," explained the WTO, noting that the pace of expansion could slow sharply once pent up demand is exhausted, and business inventories have been replenished.
"More negative outcomes are possible if there is a resurgence of Covid-19 in the fourth quarter," it added.
Trade of certain goods 'devasted'
According to the WTO, the pandemic has had a highly uneven effect on different sectors, as the overall world average fell by 21%.
Trade in agricultural products fell just 5%, given that food, a necessity, continued to be produced and shipped even under the strictest lockdown conditions. Fuels and mining products, on the other hand, fell by 38% as prices collapsed and people consumed less owing to travel restrictions. Manufactured goods saw a drop of 19%.
Negative global GDP growth in 2020
Forecasts for 2020's global gross domestic product (GDP) – the measure of the market value of all goods and services – was also downgraded to -4.8%, compared to -2.5% under the more optimistic scenario in April.
GDP growth is expected to pick up to 4.9% in 2021, but this is highly dependent on policy measures and on the severity of the virus.
Although the decline during the pandemic is similar in magnitude to the global financial crisis of 2008-09, the economic context is very different. The contraction in GDP has been much stronger in the current recession while the fall in trade has been more moderate, said WTO.
Exports and imports by region
Trading in merchandise recorded its sharpest ever single-period decline in the second quarter, falling 14.3% compared to the previous period, but the impact differed strongly across regions.
The steepest declines were in Europe and North America, where exports fell 24.5% and 21.8%, respectively. In comparison, Asian exports were relatively unaffected, dropping just 6.1%.
During the same period imports were down 14.5%, 19.3% and 7.1% in North America, Europe and Asia, respectively.