The worst has been avoided. If the pandemic crisis led to fears of a double-digit drop in world trade - the World Trade Organization (WTO) predicted a 13 to 32% drop in the spring of 2020 - this has not happened. According to the world trade body, which published new forecasts on Wednesday, the year 2020 will end up with a 5.3% decline. "The recovery in world trade has been faster than expected," said the organisation's director general, Ngozi Okonjo-Iweala, at a press conference.
"World trade has held up relatively well" in the turbulence generated by the Covid-19 crisis, commented WTO chief economist Robert Koopman. And it was the existing WTO rules that prevented the introduction of binding or protectionist measures, his director general noted.
Asia has held up
Asia is the only region in the world to end 2020 with a 0.3% increase in exports. The management of the pandemic limited the extent of the economic downturn in China and other Asian economies, which also allowed them to continue importing. Their imports fell by only 1.3%, compared with 7.6% for Europe and 6.1% for North America.
The different scenarios for the recovery of world trade envisaged by the WCOMC
"Many businesses and households have adapted to changing circumstances by finding innovative ways to sustain economic activity in the face of health restrictions on mobility," the WTO also points out.
An 8% rebound
For the current year, the organisation predicts an 8% increase in merchandise trade volumes in the best-case scenario before a slight decline the following year.
In 2022, the WTO predicts an increase of only 4% in trade. This year, demand for goods is expected to be dominated by North America (11.4% increase in imports) and Europe (+8.4%) thanks in particular to the strong fiscal stimulus measures in the United States. The other economies should benefit.
However, the game is not over. The WTO fears a less optimistic scenario in which some countries face a new pandemic wave, forcing them to re-confine all or part of their population. Covid-19 continues to pose "the greatest threat to trade prospects, as any hoped-for recovery could easily be jeopardised by new waves of infection," it says.
The future depends on vaccination
The future of global trade depends on large-scale vaccination. "We need better distribution and greater production capacity for vaccines," said Ngozi Okonjo-Iweala as WTO members discussed how to adapt intellectual property rules to the crisis.
No relocations
Asked about the current state of world trade, Robert Koopman said that the statistics do not show a relocation of manufacturing production at the global level. At most, he points to a diversion of some trade that is more related to ongoing trade conflicts than to the Covid-19 crisis. One thing is certain: world trade will not return to pre-crisis levels in the next two years.