Cargo cranes are used to take containers off of a ship at the Port of Tacoma in Tacoma, Wash., on Nov. 4, 2019.The Associated Press
The World Trade Organization on Wednesday forecast that goods trade would shrink more steeply this year than in the global financial crisis a decade ago before rebounding in 2021 as the COVID-19 pandemic recedes – if countries worked together.
The WTO said global trade would fall this year by between 13 per cent and 32 per cent, giving a wide range because so much about the economic impact of the health crisis was uncertain. At the height of the financial crisis in 2009, trade dropped 12.5 per cent.
“These numbers are ugly and there is no way around that,” WTO Director-General Roberto Azevedo told a news conference.
Comparisons with the financial crisis and even the Great Depression of the 1930s were inevitable, he said. However, unlike then, banks were not short of capital and the economic engine was in decent shape.
“The pandemic cut the fuel line to the engine. If the fuel line is reconnected properly, a rapid and vigorous rebound is possible,” he continued.
Countries working together would see a faster recovery than if each country acted alone, while monetary, fiscal and trade policy all need to go in the same direction. A turn to protectionism would create new shocks, he said.
Trade tensions, notably between the United States and China, led to a 0.1 per cent decline in global goods trade last year.
A number of national leaders have said the crisis and an acute shortage of medical supplies means production should be brought home. Azevedo said no country would really become fully self-sufficient and that the answer was to diversify so that supplies came from more than a single region or player.
The Geneva-based WTO said that for 2021 it was forecasting a rebound in global goods trade of between 21 per cent and 24 per cent, depending largely on the duration of the coronavirus outbreak and the effectiveness of policy responses.
This year, nearly all regions would suffer double-digit percentage declines in trade, with exports from North America and Asia the hardest hit. Sectors with complex value chains, such as electronics and automotive products, would also see steeper falls.
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, with knock-on effects for goods.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.