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The WTO warns of a historic drop in world trade in the Q2 2020

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The world merchandise trade suffered a historic fall in the second quarter of this year, as estimated by the World Trade Organization (WTO) in its new edition of the Goods Trade Barometer.

“World merchandise trade likely registered a historic fall in the second quarter of 2020,” the report says.

The study specifies that the world merchandise trade index fell to 84.5 points, which represents “18.6 points down from the same period last year.”

“This reading – the lowest on record in data going back to 2007, and on par with the nadir of the 2008-09 financial crisis – is broadly consistent with WTO statistics issued in June, which estimated an 18.5% decline in merchandise trade in the second quarter of 2020 as compared to the same period last year,” the document states.

The WTO specified that the sectors most affected are:

  • automobile sales, whose index fell to 71.8 points,
  • air transport, with an index of 76.5 points.

At the same time, “Export orders (88.4) show signs of recovery as this index has turned upward.”, while “Meanwhile, indices for electronic components (92.8) and agricultural raw materials (92.5) have held up relatively well, showing only modest declines,” report states.

According to the organization, global merchandise trade fell by 14% in the second quarter compared to the first, corresponding to the less pessimistic scenario of the two predicted by the WTO last April, whereby global trade would be reduced by 13% by 2020 compared to 2019.

“However, as WTO economists warned in June, the heavy economic toll of the COVID-19 pandemic suggests that the projections for a strong, V-shaped trade rebound in 2021 may prove overly optimistic. As uncertainty remains elevated, in terms of economic and trade policy as well as how the medical crisis will evolve, an L-shaped recovery is a real prospect. This would leave global trade well below its pre-pandemic trajectory,” notes from the report.

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