The WTO Report Raises Expectations For Trade Recovery, Global Trade Growth This Year May Reach 8%

According to a report on the German "Business Daily" website on March 31, the severe economic impact of the new crown epidemic has not yet ended, but the World Trade Organization is cautiously spreading hope.

The World Trade Organization released its annual outlook report in Geneva on March 31. The key sentence is: "The possibility of a rapid recovery in world trade has increased." This should be good news for Germany, because its prosperity is to a large extent. Depends on exports of automobiles, machinery, chemicals and other commodities.

WTO Director-General Ngozi Okonjo-Ivira emphasized at the remote report meeting that the total global merchandise trade volume is expected to achieve a 4% growth in 2022, but it will still be lower than the level before the outbreak of the new crown crisis.

Vaccines play a key role

According to the report, according to calculations by WTO economists, the total global merchandise trade fell by 5.3% in 2020, mainly due to the closure of cities, border closures and factory shutdowns caused by the outbreak. Although this is the sharpest decline in recent years, the downward trend is not as severe as the WTO initially feared.

In addition, export data rose again in the second half of 2020. WTO economists believe that part of the factor contributing to this encouraging momentum is that the successful development of the new crown vaccine has strengthened the confidence of businesses and consumers.

WTO experts are also optimistic about the huge fiscal stimulus plan launched by major trading groups such as the European Union and the United States.

However, the WTO Director-General Okonjo Ivira made it clear: "Vaccines are the best stimulus package." She called for the rapid and fair distribution of vaccines on a global scale.

She said: "As long as there are still many people and countries that do not have sufficient vaccine supplies, growth will be suppressed."

The WTO Director-General also warned that in addition to insufficient vaccine supplies, new variants of the new crown virus also pose a short-term threat to the expected recovery in global trade.

The report pointed out that in the medium and long term, the huge debt accumulated to support the development of the national economy may also become a risk.

Okonjo-Ivira praised WTO members for their skepticism of protectionist measures. She said that even if some members set up trade barriers at the beginning of the epidemic, they were later removed.

Okonjo-Ivira specifically pointed out that vaccine production activities have revealed the importance of border opening in the fight against the new crown epidemic: one of the well-known vaccines contains 280 ingredients from 19 countries. The WTO will negotiate with vaccine manufacturers in April to ensure a smooth supply chain.

The debt burden still needs to be vigilant

According to a report by the Russian "Kommersant" on April 1, the WTO said in the updated trade outlook report that global trade is recovering faster than expected. The total global merchandise trade volume may increase by 8% this year after falling 5.3% last year. . The WTO believes that the risks that hinder the achievement of this goal include slower vaccination rates in countries, potential problems caused by debt growth, and high fiscal deficits in developing countries. WTO experts believe that the growth rate of total global merchandise trade will slow to 4% in 2022.

In the outlook report released in October last year, the WTO predicted that the total global merchandise trade would decline by 9.2% in 2020 and increase by 7.2% in 2021. Now, the WTO points out that last year's total merchandise exports fell by 8% (of which energy trade was reduced by 35% due to the drop in oil prices). The export of commercial services has shrunk even more severely, as high as 20% (of which the tourism industry has shrunk by 63%).

According to the report, the largest decline in exports occurred in the second quarter of last year, as high as 21%, the decline was 6% in the third quarter, and a slight rebound of 2% in the fourth quarter.

The new outlook report pointed out that the global economy will shrink by 3.8% in 2020, and will grow by 5.1% and 3.8% in 2021 and 2022, respectively. Looking to the future, in the short term, the main risks to trade are still the continued weakness of trade in services, the slow speed of vaccination (restrictions on the export of medical products in various countries hinder the expansion of vaccine production) and the possible implementation of a new round of epidemic control measures; in the medium term Look, the increase in debt burdens and budget deficits (especially in highly indebted developing countries) may hinder trade growth.

Asia's exports are growing fastest

The report pointed out that last year, Asia became the only region that maintained a positive growth (0.3%) in merchandise exports.

According to reports, this year Asia is expected to become one of the fastest growing regions in the world (8.4%). Asian countries’ imports fell by 1.3% last year and are expected to increase by 5.7% this year.

The China Manufacturing Purchasing Manager Index and Non-manufacturing Business Activity Index released on March 31 showed that China’s economic growth accelerated, and both indicators achieved growth in March.

North America’s exports will fall by 8.5% in 2020, and this year may grow by 7.7% in the context of large-scale fiscal stimulus. Imports in North America fell by 6.1% last year and may increase by 11.4% this year.

European exports fell by 8% last year, and this year is likely to increase by 8.3%. European imports fell by 7.6% last year and may increase by 8.4% this year.

The report pointed out that the blockage of the Suez Canal is a short-term factor, and the WTO did not consider this when preparing the new outlook.

Earlier, some experts predicted that given that goods transported via the Suez Canal accounted for approximately 13% of the total global trade, the loss caused by shipping interruptions would be approximately US$6 billion to US$10 billion a week (1 US dollar is approximately 6.6 yuan— -Note on this website).

According to estimates by the British "Lloyd Ship Daily", the value of traffic on the westbound canal is approximately US$5.1 billion per day, and the value of traffic on the eastbound is approximately US$4.5 billion per day.