Global unity needed to address trade plunge

With more than half of humanity asked to stay at home and economic activity grinding to a virtual standstill in many places, the havoc wreaked by COVID-19 coronavirus continues unabated.

While the world attention is focused on tackling the health aspect, the unfurling damage to the global economic fabric is a matter of huge concern.

Global trade growth is expected to plummet by up to a third in 2020 due to the pandemic, according to the World Trade Organization (WTO), which has warned that the numbers would be “ugly”.

World trade is expected to fall by between 13 per cent and 32 per cent in 2020 as the COVID-19 pandemic disrupts normal economic activity around the world.

WTO chief Roberto Azevedo has warned that the downturn may well be the deepest economic recession or downturn of our lifetimes.

The wide range of possibilities for the predicted decline is explained by the unprecedented nature of this health crisis and the uncertainty around its precise economic impact.

As per WTO, world merchandise trade is set to plummet by between 13 and 32% in 2020 due to the COVID-19 pandemic.

A 2021 recovery in trade is expected, but dependent on the duration of the outbreak and the effectiveness of the policy responses.

Nearly all regions will suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest.

Trade will likely fall steeper in sectors with complex value chains, particularly electronics and automotive products.

Services trade may be most directly affected by COVID-19 through transport and travel restrictions.

It should be noted that merchandise trade volume already fell by 0.1% in 2019, weighed down by trade tensions and slowing economic growth. The dollar value of world merchandise exports in 2019 fell by 3% to $18.89 trillion.

Adding to the agony, the International Labour Organization (ILO) has predicted that 25 million jobs are threatened by the new coronavirus.

The latest dire assessment reflects the full or partial lockdown measures affecting almost 2.7 billion workers – four in five of the world’s workforce.

ILO Director-General Guy Ryder has noted that at the start of the year – before COVID-19 spread worldwide - global unemployment already stood at around 190 million.

Workers in four sectors that have experienced the most drastic effects of the disease and falling production are: food and accommodation (144 million workers), retail and wholesale (482 million); business services and administration (157 million); and manufacturing (463 million).

Together, they add up to 37.5 per cent of global employment and this is where the sharp end of the impact of the pandemic is being felt now, as per ILO.

An additional concern is the fact that in low and middle-income countries, the worst-hit industries and services have a high proportion of low-wage workers in informal employment, with limited access to health services and State welfare safety nets.

Appropriate policy measures are desperately needed as workers face a high risk of falling into poverty and are likely to experience greater challenges in regaining their livelihoods during the recovery period.

In WTO chief Azevêdo’s words: “A rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects. We need to lay the foundations for a strong, sustained and socially inclusive recovery. Keeping markets open and predictable, as well as fostering a more generally favourable business environment, will be critical to spur the renewed investment we will need.”