Considering the uncertainty of the impact of the “unprecedented” epidemic on the global economy, the global trade shrinkage in 2020 may exceed the 2008 international financial crisis Time level. The report also mentioned that global trade in goods has fallen by 0.1% in 2019 due to trade tensions and slowing economic growth. In 2020, basically all regions of the world will experience a double-digit decline in trade volume, of which North American and Asian export trade will be the hardest hit. The report also emphasized that global trade is still likely to recover in 2021, but there are also uncertainties, and its final performance depends to a large extent on the duration of the epidemic and the effectiveness of national anti-epidemic policies.
Trade shrinks, crisis emerges
In this forecast report, the World Trade Organization roughly analyzes the two situations in which global trade will occur in the next few years, and clearly states that no matter what the situation is, the fact that the global economy has been severely impacted by the new coronary pneumonia epidemic is impossible. Avoided.
A more optimistic situation is that global merchandise trade will decline by 13% in 2020 and then rebound by 21% in 2021; in this case, global GDP will slow by 2.5% in 2020 and will grow by 7.4% in 2021.
A more pessimistic situation is that global merchandise trade will drop by as much as 32% in 2020, and then rebound by 24% in 2021; in a pessimistic situation, global GDP will likely shrink by 8.8% in 2020, and then by 2021. An increase of 5.9%.
In this regard, WTO Director General Azevedo said that such economic figures are very ugly, but they cannot be avoided. “The actions now taken will determine the shape of future recovery and the prospects for global growth.” Azevedo said that the world needs to lay the foundation for a strong, sustained and socially inclusive recovery. However, if the global economy wants to recover quickly after being severely hit, the process will be quite difficult. “This will largely depend on the duration of the outbreak and the effectiveness of national policies to respond to the outbreak.”
World Trade Organization Director General Robert Azevedo
WTO official website chart: green line is optimistic, red line is pessimistic
World Trade Organization (WTO) logo
Therefore, Azevedo emphasizes the need to maintain market openness and predictability and create a more favorable business environment, which is essential for stimulating investment recovery. In addition, all countries should work together to cope with economic recession and achieve economic recovery, including monetary, fiscal and trade policies should all work together in the same direction, and individual countries should not act alone.
Azevedo also warned some countries that if trade barriers were set again during the new crown epidemic, the situation would be even worse. The root of the collapse of the global trading system in the 1930s was precisely due to the practice of trade protectionism in developed countries.
“This crisis is first and foremost a major public health crisis, so governments have taken unprecedented measures to protect people’s lives and health.” Azevedo said, but now the epidemic in addition to causing physical suffering to humans, The decline in trade and economic recession will also pose a serious threat to every family and business.
“Our immediate goal is to control the pandemic and reduce the economic losses to individuals, businesses, and the country. But policymakers must begin to develop a series of plans for the consequences of the pandemic.”
Worrying prospects, suggestions from all parties
According to the analysis of the British “Guardian”, even if it may reach an optimistic situation, that is, global merchandise trade fell by about 13%, this economic recession is also more serious than the 2008-2009 global financial crisis. And if the more pessimistic situation becomes a reality, the degree of economic recession will be similar to that of the Great Depression from 1929 to 1932.
Affected by the spread of the epidemic around the world, countries have issued varying degrees of transportation and travel bans, and service trade has been the most directly affected. Unlike trade in goods, there is no inventory in trade in services, and current losses are difficult to recover in the future. World Tourism Organization Secretary-General Zurab Pololikashvili said that it is difficult to assess the overall impact of the new coronary pneumonia epidemic on the global tourism industry, but it is now necessary to fully support the tourism industry to make it stronger and more capable Resist risks because the recovery of the tourism industry will bring more jobs and boost economic growth.
American economist Harald Malm Glenn believes that the impact of the decline in global trade on emerging market economies and other major exporters will last longer, and the government needs more wisdom to formulate effective policies to reduce losses.
During the Great Depression in April 1930, unemployed people in the United States queued for job interviews
The International Labour Organization also published a research report entitled “The New Coronary Pneumonia Epidemic Situation and the World of Work” on April 8th. The second quarter resulted in the disappearance of 6.7% of working hours globally, which is equivalent to 195 million full-time employees. Director General Guy Ryder called on the world to find solutions that can help all sectors of society, especially those most vulnerable or powerless. “We must work to build a new safer, fairer and more sustainable social security system.”
Liu Zhenmin, deputy secretary-general of the United Nations in charge of economic and social affairs, said in a written message to the media: “Urgent and bold policy measures must be taken to control the epidemic, save lives, protect the vulnerable groups in society, while maintaining economic growth and financial stability .”
Work together to maintain confidence
According to the WTO’s forecast, trade in almost all countries and regions will see a double-digit decline in 2020, with exports from North America and Asia being the hardest hit. Due to the rapid spread and expansion of the epidemic, the global value chain system has been interrupted. Among them, the trade volume of electronic products and automotive products industries with complex value chains will decline even more.
In addition, due to various restrictions on transportation and tourism during the epidemic, many retail stores and hotels have closed their doors and closed their businesses. Service trade is the most directly affected part of the world’s trading system. However, service trade is not included in the WTO’s commodity trade forecast. The WTO pointed out that some of the decline in service trade caused by the epidemic may never be compensated.
However, the WTO also said that certain service industries may get rapid development in this epidemic crisis, such as information technology services. Because of the epidemic, many companies have begun to allow employees to work remotely from home, and the demand for information technology services from these groups has surged.
WTO Director General Azevedo believes that the correct way to deal with the impact of the industrial chain is international cooperation and international coordination to ensure stable product supply and normal operation of international trade. If all countries work together, the world economy will recover faster than individual actions alone. The International Monetary Fund has also previously issued a statement that resisting the impact of the epidemic requires a coordinated global health and economic policy. Several international organizations are collaborating to ensure that countries affected by the epidemic are supported through emergency financing, policy advice, and technical assistance.
In the era of economic globalization, only by working together can we get out of the predicament.