Mumbai: The World Trade Organisation (WTO) had predicted that world merchandise trade is likely to decline by between 13-32% in 2020 due to the COVID-19 pandemic, according to a summary of the global body’s projections prepared by The Gem & Jewellery Export Promotion Council (GJEPC).
The summary is part of the Council’s ongoing drive to keep member-exporters informed about global economic trends and plan their businesses accordingly.
Further, while the document states that nearly all regions will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest, it also points out that WTO believes trade recovery could take place in 2021. However, the recovery would be dependent on the duration of the outbreak and the effectiveness of the policy responses.
The projections are based on the WTO’s assessment that trade was already slowing in 2019 before the virus struck, weighed down by trade tensions and slowing economic growth. It reports that merchandise trade registered a slight decline of 0.1% in volume terms after rising by 2.9% in the previous year, with both merchandise exports and imports dropping by 3% in value terms, though the value of export of commercial services rose by 2%.
According to the GJEPC document, WTO has based its projections for 2020 on two varied scenarios, one that it describes as “relatively optimistic” and the other as “more pessimistic”.
In the first optimistic scenario, the organisation envisages a “sharp drop in trade followed by a recovery starting in the second half of 2020”, one that “will be strong enough to bring trade close to its pre-pandemic trend”.
On the other hand, the more pessimistic estimate sees “a steeper initial decline and a more prolonged and incomplete recovery”.
Significantly, under both scenarios, WTO believes that all regions will suffer double-digit declines in exports and imports in 2020, except for “Other regions” (which is comprised of Africa, Middle East and Commonwealth of Independent States (CIS) including associate and former member States), the GJEPC document states.
GJEPC notes that the relatively small estimated decline in exports projected by WTO for countries from these regions stems from the fact that they rely heavily on exports of energy products, demand for which is relatively unaffected by fluctuating prices. If the pandemic is brought under control and trade starts to expand again, most regions could record double-digit rebounds in 2021 of around 21% in the optimistic scenario and 24% in the pessimistic scenario – albeit from a much lower base.
There is one final rider put forward by the WTO – the extent of uncertainty is very high, and it is well within the realm of possibilities that for both 2020 and 2021 the outcomes could be above or below what has been presented.
