World Trade Organisation (WTO): Global Trade Falls Sharply in H1 2020; Government Actions Helped in Restraining Contraction

The global trade has fallen sharply in the first half of the year due to the coronavirus (COVID-19) pandemic but rapid government responses have helped in tempering the contraction, according to the World Trade Organisation (WTO).

Moreover, the world trade organisation economists now believe that while trade volumes will register a steep decline this year, they are unlikely to reach the worst-case scenario projected in April, it said in a statement. Also, the WTO stated that global trade is expected to fall by between 13 percent and 32 percent in 2020 as the COVID-19 epidemic disrupts normal economic activity and life around the globe.

WTO said the volume of merchandise trade shrank 3 per cent year-on-year in the first quarter and initially estimated for the second quarter indicate a year-on-year drop of around 18.5 per cent. It said adding that “These declines are historically large, but could have been much worse,” and as things currently stand, the trade would only need to grow by 2.5 percent per quarter for the remainder of the year to meet the optimistic projection. However, looking ahead to 2021, adverse developments, including a second wave of COVID-19, weaker-than-expected economic growth, or widespread recourse to trade restrictions, could see trade expansion fall short of earlier projections.

Besides, Director-General Roberto Azevedo said the fall in trade “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”. He said adding that looking ahead to next year, a slower-than-expected pace of economic recovery would weight on trade growth.

“World Trade fell sharply in the first half of the year as the coronavirus pandemic upended the global economy. However, rapid government responses helped temper the contractions.”

Since 1995 India is a member of the WTO (World Trade Organisation). The Geneva-based body frames rules related to global exports and imports.