Coronavirus: 'Drop in global trade to be worse than 2008 crisis'

Marco Green
April 9, 2020

The decline in world trade due to Covid-19 will likely exceed the trade slump brought by the global financial crisis of 2008-09, the World Trade Organization (WTO) said on Wednesday, with merchandise trade expected to decline 13-32% in 2020 due to the Covid-19 pandemic.

The WTO's director general Roberto Azevedo described the figures as "ugly".

The WTO acknowledged that there was huge uncertainty around how the economic crisis around the pandemic, which has infected more than 1.4 million people globally and killed almost 83,000, would unfold. He stated the scenario was in the beginning a well being disaster and he acknowledged that governments had to take steps to shield individuals's lives. The pessimistic scenario of a 32 percent or more drop assumes a steeper initial decline and a more prolonged and incomplete recovery. Trade will be an important ingredient here, along with fiscal and monetary policy.

"As we face what may well be the deepest economic recession or downturn of our lifetimes, we should aim to make the most of all potential drivers of sustainable growth to reverse this situation", he told a virtual news conference in Geneva.

Regarding global trade in goods previous year, the value fell by 3 percent to $18.88 trillion, with the world's top exporter, China, registering no growth at $2.49 trillion, followed by the USA with a 1 percent contraction to $1.64 trillion and Germany with a 5 percent fall to $1.48 trillion.

The WTO also confirmed that 2019 had ended on a sombre note, with a 0.1 percent decline in goods trade, weighed down by trade tensions, notably between the United States and China, and an economic slowdown.

The dollar value of world merchandise exports fell by three percent to $18.89 trillion, the WTO said.

Services are not included in the WTO's forecast, but the WTO said trade in this area may be hit hardest by COVID-19 because of transport and travel restrictions.

"After the financial crisis of 2008-09, trade never returned to its previous trend..."

Governments around the world have taken radical measures to try to halt the spread of the deadly virus, including closing schools and public spaces and asking more than half of humanity to remain at home.

"Whole sectors of national economies have been shut down, including hotels, restaurants, non-essential retail trade, tourism and significant shares of manufacturing".

"Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical to spur the renewed investment we will need".

Other reports by Click Lancashire

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