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Ngozi Okonjo – Iweal, Director-General of the WTO
The World Trade Organization (WTO) noted that the relatively positive short-term outlook for world trade is marred by regional disparities, persistent weakness in trade in services and delayed immunization schedules, especially in poor countries. .
COVID-19, according to the WTO, continues to pose the greatest threat to business prospects, as further waves of infection could easily jeopardize any hoped-for recovery.
“The strong rebound in world trade since the middle of last year has helped ease the shock of the pandemic for people, businesses and economies,” said WTO Director-General Ngozi Okonjo-Iweala.
“Keeping international markets open will be essential for economies to recover from this crisis and a rapid, global and equitable deployment of vaccines is a prerequisite for the strong and sustained recovery we all need,” she added. .
The short-term risks to the forecast are decidedly on the downside and focus on factors related to the pandemic. These include insufficient production and distribution of vaccines or the emergence of new vaccine-resistant strains of COVID-19. In the medium to long term, public debt and deficits could also weigh on economic growth and trade, especially in heavily indebted developing countries.
The forecast shows two alternative scenarios for trading. In the upward scenario, the production and dissemination of vaccines would accelerate, which would make it possible to ease containment measures earlier. This is expected to add around 1 percentage point to global GDP growth and around 2.5 percentage points to global merchandise trade volume growth in 2021.
Trade would return to its pre-pandemic trend in the fourth quarter of 2021. In the downward scenario, vaccine production does not keep up with demand and / or new virus variants emerge against which vaccines are less effective. Such a result could reduce global GDP growth by 1 percentage point in 2021 and reduce trade growth by almost 2 percentage points.
For 2020 as a whole, merchandise trade fell 5.3%. This drop is lower than the 9.2% drop forecast in the previous WTO forecast for October 2020. The better-than-expected performance towards the end of the year can be explained in part by the announcement of new COVID vaccines -19 in November, which helped improve business and consumer confidence.
The volume of world merchandise trade plunged 15.0% year-over-year in the second quarter of 2020 (revised up from -17.3% in October) as countries around the world imposed lockdowns and travel restrictions to limit the spread of COVID-19. Lockdowns were eased in the second half of the year with falling infection rates, allowing merchandise shipments to return to near 2019 levels in the fourth quarter.
The acceleration in trade and output growth in the second half of 2020 was supported by significant government policy interventions, including significant fiscal stimulus in the United States. These measures boosted household incomes and supported continued spending on all goods, including imports. In addition, many businesses and households have adapted to changing circumstances, finding innovative ways to support economic activity in the face of health-related mobility restrictions. Effective management of the pandemic has limited the extent of the economic downturn in China and other Asian economies, allowing them to continue importing. These actions have helped support global demand and may have prevented an even greater decline in trade.
Trade in nominal US dollars fell even more sharply than trade in volume in 2020. The values of world merchandise exports fell by 8% from the previous year, while receipts from commercial services fell by 20%. %. Trade in services was particularly burdened by restrictions on international travel, which prevented the provision of services requiring physical presence or face-to-face interaction.
“Increasing vaccine production will allow businesses and schools to reopen faster and help economies get back on their feet. But as long as a large number of people and countries are excluded from sufficient access to vaccines, it will stifle growth and risk reversing global health and economic recovery, ”she said.
The Director-General added that trade across value chains has helped countries access essential food and medical supplies during the crisis.
“The manufacture of vaccines requires inputs from many different countries. One of the main COVID-19 vaccines consists of 280 components from 19 different countries, ”she said. “Trade restrictions make it more difficult to ramp up production. The WTO has helped keep trade flowing during the crisis. Now the international community must harness the power of trade to expand access to life-saving vaccines. “
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