Trade May Decline by a Third: WTO

The economic downturn from the COVID-19 pandemic disrupts supply chains and could reduce trade by up to a third. The World Trade Organization predicts a range between 13 and 32 percent, “a wide range because so much about the economic impact of the health crisis was uncertain,” reports Philip Blenkinsop for the World Economic Forum and Reuters. At the height of the 2009 debt crisis, trade dropped by only 12.5 percent. Trade could rebound in 2021, but only if the economic response is managed well and infections do not rebound. Exports from North America and Asia will be hardest hit. Many analytsts compare the current crisis to the Great Depression of the 1930s, but officials warn the banks are not short on capital. “A turn to protectionism would create new shocks,” warns WTO Director-General Roberto Azevedo. Regarding shortages of medical supplies, Azevedo urges diversifying rather than concentrating supplies in home nations. The WTO prediction did not account for services, and restrictions on travel could result in a larger slump. – YaleGlobal