WTO "Global Trade Expected to Decline by Up to 32% This Year Due to COVID-19 Impact"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The World Trade Organization (WTO) has projected that the global trade volume this year will decrease by up to 32% compared to the previous year due to the COVID-19 pandemic.

On the 8th (local time), the WTO stated in a press release, "The COVID-19 pandemic has disrupted normal economic activities and daily life, causing global trade to decline by 13 to 32% this year," adding, "This decline in trade is expected to be greater than that during the 2008-2009 global financial crisis."

The WTO expects double-digit decreases in nearly all regions. It anticipates that if trade sharply declines but begins to recover in the second half of this year, it could catch up to the pre-COVID-19 trade growth trend. However, if the initial trade decline prolongs and recovery is slow, only partial trade recovery is expected.

In particular, larger trade declines are expected in sectors with complex value chains such as electronics and automotive industries. The WTO also explained that service trade will be directly hit due to transportation and travel restrictions caused by COVID-19.

WTO Director-General Roberto Azev?do expressed concern, saying, "This crisis is the first and core health emergency that has led governments worldwide to take unprecedented measures to save people," and added, "Beyond the suffering caused by the disease itself, the unavoidable decline in trade and production will bring painful consequences to households and businesses."

However, he emphasized that recovery of global trade is possible by highlighting open markets. Director-General Azev?do stressed, "A rapid and strong rebound is possible. The decisions made now will determine the shape of future recovery and global growth prospects," and added, "Market openness, predictability, and creating a business-friendly environment are crucial for promoting investment."

The WTO stated that depending on the duration of the COVID-19 pandemic and the effectiveness of policy responses, global merchandise trade is expected to recover by 21 to 24% next year, adding, "If countries cooperate, the recovery will be much faster than if they act alone."