World trade falls sharply in H12020 on COVID-19

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  • Q2 merchandise trade volumes down by 18.5%
  • Govt responses helped temper the contraction
  • Global economic outlook over the next two years remains uncertain

Harare – World trade fell sharply in the first half of 2020 (H12020) as the COVID-19 pandemic upended the global economy, the World Trade Organisation (WTO) has said.

Merchandise trade volumes dropped by 3% year on year in the first quarter of 2020 (Q1) while estimates for the second quarter (Q2) indicate an 18.5% year on year contraction, declines which according to the organization could have been worse.

“The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record. But there is an important silver lining here: it could have been much worse,” said WTO Director‑General Roberto Azevêdo.

In its annual report issued in April 2020, the WTO predicted that merchandise trade would fall by between 13% and 32% in 2020 compared to the prior comparable period depending on two main factors, one being how long it takes to bring the pandemic under control and the other being the policies governments implement to mitigate the virus’ economic consequences..

The statement issued by the organization indicates that rapid government responses to the virus have helped temper the projected contraction.

Containment efforts intensified in the second half March with strict social distancing measures and restrictions on travel and transport being fully in effect in most countries throughout April and May and are now being relaxed in most countries.

“These developments are reflected in a variety of economic indicators which, taken together, suggest trade may have possibly bottomed out in the second quarter of 2020”, the WTO stated.

The organization added that the global economic outlook over the next two years remains highly uncertain with Mr Azevedo stating that although the H1 figures are show a better performance than previously estimated, “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 added

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