Economy

Global trade flows face steep decline in 2020

WTO warns of contraction of up to 30% this year. Global GDP could see a decline of 5% and 6% if social distancing measures last 3 months

Containers in Port of Valparaiso in Chile
Containers at the Port of Valparaiso, in Chile. Photo: Creative Commons

The World Trade Organization (WTO) is predicting a “very sharp” decline in global trade, with the new coronavirus pandemic expected to have an “enormous impact” on the economy and on jobs.

According to documents discussed among G20 leaders and obtained by Valor Econômico, global trade may fall between 5% and 30% this year. Global GDP, by its turn, could see a decline of 5% and 6% if social distancing measures last 3 months in average. “The numbers are simply scary”, a source told Valor.

“Recent projections predict an economic downturn and job losses that are worse than those of the global financial crisis a dozen years ago,” WTO Director-General Roberto Azevêdo said in a video message.

Developing countries would be hit hard, according to UNCTAD. In face of a steep decline in demand for their export goods, these countries (excluding China) stand to lose $800 billion in foreign revenues.

During the financial crisis of 2008-09, global trade shrank 12.2% in volume and 22.6% in value.