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WTO Predicts That Goods Trade Will Shrink Even More Than 2008 Crisis

The covid-19 pandemic has affected the entire world economically. World Trade has been predicted to fall to between 13% and 32% in 2020. The Corona virus pandemic has affected the international trade almost more than at anytime before, especially during the post war era. In a report published by the World Trade Organization two scenarios concerning the global trade was looked at. Firstly, in a pessimistic scenario, global goods could drop by 32% in 2020 and with about 24% in 2021 while in the optimistic scenario global trade global trade could fall by 13% in 2020 and 21% in 2021. If the pessimistic scenario takes place it could be the worst drop since the Great depression.

The estimates made by the World Trade Organization for 2021 are not quite certain yet. Roberto Azevedo, World Trade Organization director said “The unavoidable declines in trade and output will have terrible consequences for households and businesses, on top of the human suffering caused by the disease itself”. The Director also stressed that the goal is to bring the virus under control as well as the economic damage to people. The result of the World health trade organization also warms there is high uncertainty as the outcome could fall below or above. The global trade already collapsed during the 1930s and was partly due to measures impossible by certain developed countries. The World Trade Organization Director General also insinuated that the end of the feud between China and USA could help without mentioning either countries. He said “ keeping market open and predictable, as well as fostering a more generally favorable business environment, will be critical to spur the renewed investment we will need. And if countries work together, we will see a much faster recovery than if countries act alone”.

In 2019, before the virus struck, Trade was already slowing down. Sectors of National economies have been shut down including Tourism, Non essential retail trade. According to the WTO imports of key production input are likely to be interrupted by social distancing. Although the Covid-19 pandemic has hit the world hard, several services like Technology benefits from it, because of the lockdown companies have permitted their employees to work from home. Worldwide about 80,000 people have died from the deadly virus.

The WTO also said its expecting recovery concerning trade next year, but how good the recovery will be depends on the policy responses and how long the pandemic lasts. When Corona virus was confined in China, value chain disruption was already an issue.

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