World trade fell sharply in the first half of the year as the COVID-19 pandemic upended the global economy. World Trade Organisation (WTO) economists believe that while trade volumes will register a steep decline in 2020, they are unlikely to reach the worst-case scenario of a 32% contraction projected in April.
According to WTO statistics, the volume of merchandise trade shrank by 3% year on year in the first quarter. Initial estimates for the second quarter indicate a year on year drop of around 18.5%. As things currently stand, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection of a 13% contraction in 2020.
WTO's Director-General Roberto Azevêdo says this is genuinely positive news, but we cannot afford to be complacent. For output and trade to rebound strongly in 2021, fiscal, monetary and trade policies will all need to keep pulling in the same direction, he says.