World merchandise trade is set to plummet by between 13 and 32% in 2020 due to the COVID-19 pandemic, while a 2021 recovery in trade is expected, but dependent on the duration of the outbreak and the effectiveness of the policy responses, the World Trade Organization has said.
According to the WTO, nearly all regions will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest. Trade will likely fall steeper in sectors with complex value chains, particularly electronics and automotive products.
Services trade may be most directly affected by COVID-19 through transport and travel restrictions. Merchandise trade volume already fell by 0.1% in 2019, weighed down by trade tensions and slowing economic growth. The dollar value of world merchandise exports in 2019 fell by 3% to US$ 18.89 trillion. The value of commercial services exports rose 2% to US$ 6.03 trillion in 2019.
"This crisis is first and foremost a health crisis which has forced governments to take unprecedented measures to protect people's lives," WTO Director-General Roberto Azevêdo said.
"The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself."
"The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policymakers must start planning for the aftermath of the pandemic," he said.
"These numbers are ugly - there is no getting around that. But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. We need to lay the foundations for a strong, sustained and socially inclusive recovery. Trade will be an important ingredient here, along with fiscal and monetary policy. 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. And if countries work together, we will see a much faster recovery than if each country acts alone."