By Obinna Chima
Despite the fact that global trade has shown signs of bouncing back from a deep, COVID-19 induced slump, the World Trade Organisation (WTO) has cautioned that any recovery could be disrupted by the ongoing pandemic effects.
Also, the global trade body has predicted a 9.2 per cent decline in the volume of world merchandise trade for 2020, followed by a 7.2 per cent rise next year. This was a more optimistic outlook, compared with the 12.9 per cent drop it had anticipated in its April trade forecast.
Addressing a media briefing in Geneva yesterday, the WTO Deputy Director General, Yi Xiaozhun, stressed that the estimates were subject to an unusually high degree of uncertainty since they depend on the evolution of the pandemic and government responses to it.
“Strong trade performance in June and July have brought some signs of optimism for overall trade growth in 2020. Trade growth in COVID-19 related products was particularly strong in these months, showing trade’s ability to help governments obtain needed supplies.
“Conversely, the forecast for next year is more pessimistic than the previous estimate of 21.3 per cent growth, leaving merchandise trade well below its pre-pandemic trend in 2021.
“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. 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,” he explained.
In contrast to trade, the revised trade forecast showed that global GDP fell more than expected in the first half of 2020, causing forecasts for the year to be downgraded.
It revealed that consensus estimates now put the decline in world market-weighted GDP in 2020 at – 4.8 per cent compared to 2.5 per cent under the more optimistic scenario outlined in its April forecast. It, however, anticipated that GDP growth would pick up to 4.9 per cent in 2021, adding that, “this is highly dependent on policy measures and on the severity of the disease.”
“The incidence of COVID-19 worldwide has fallen from its peak in the spring, but it remains stubbornly high in many areas. Trade has played a critical role in responding to the pandemic, allowing countries to secure access to vital food and medical supplies.
“Trade has also facilitated new ways of working during the crisis through the provision of traded IT products and services. One of the greatest risks for the global economy in the aftermath of the pandemic would be a descent into protectionism. International cooperation is essential as we move forward, and the WTO is the ideal forum to resolve any outstanding trade issues stemming from the crisis,” Xiaozhun said.