World trade was already slowing before COVID-19 struck – WTO

The World Trade Organization (WTO) has said in its latest report which covers new trade and trade-related measures implemented by G20 economies between 16 October 2019 and 15 May 2020, that world trade was already slowing before the pandemic struck, weighed down by heightened trade tensions and slowing global economic growth.

Merchandise trade was down 0.1 per cent in volume terms in 2019, marking the first decline since 2009, the report revealed.

Adding that trade growth also slowed in nominal terms in 2019, as the dollar value of merchandise exports fell by 3 per cent to USD 18.89 trillion.

Although commercial services exports increased by 2 per cent to USD 6.03 trillion in 2019, the pace of growth was down sharply from 9 per cent in the previous year, it added.

The WTO further stated that, overall, the Group of 20 (G20) economies implemented 154 new trade and trade-related measures during the review period – 16 October 2019 and 15 May 2020 – of which 95 were of a trade-facilitating nature and 59 were trade-restrictive.

Sixty per cent of these measures (93 in total) were linked to the COVID-19 pandemic. Of these 93 measures, 65 facilitated trade while 28 restricted trade.

In the early stages of the pandemic, several of the measures introduced by G20 economies restricted the free flow of trade, principally for exports. But as of mid-May 2020, 70 per cent of all COVID-19 related measures were trade-facilitating.

Of the pandemic-related trade restrictions recorded, export bans accounted for more than 90 per cent. Around 36 per cent of the COVID-19 specific trade restrictions implemented by G20 economies had been repealed by mid-May.

In its trade forecast of 8 April, the WTO considered two scenarios for the crisis, one relatively optimistic and the other more pessimistic.

Under the optimistic scenario, the volume of world merchandise trade would fall by 12.9 per cent and world GDP would decline by 2.5 per cent.

Under the pessimistic scenario, trade would contract by 31.9 per cent and GDP would shrink by 8.8 per cent.

As of mid-June, preliminary trade data and trade-related indicators for the first half of 2020 are more consistent with the optimistic scenario than the pessimistic one but actual outcomes could easily fall within or even outside of the forecast range, depending on how the crisis unfolds.