While the world economy is on the brink of an unprecedented crisis due to the new type of coronavirus (Covid-19) epidemic, the process is expected to have important consequences in terms of global trade, as in every field.
According to the information compiled by the AA correspondent from the World Trade Organization (WTO) data, due to trade tensions between countries and slowing economic growth, global trade volume, on a value basis, has already decreased by 2.9 percent in 2019 compared to the previous year, falling to 38.1 trillion dollars. During this period, global exports are estimated to be 18.9 trillion dollars and imports to be 19.2 trillion dollars.
It will exceed the trade loss experienced during the global financial crisis
It is estimated that international trade will decline further this year due to the disruptions in global economic activity caused by the Covid-19 epidemic.
Forecasts for global trade are grouped under two scenarios: optimistic and pessimistic. It is predicted that global trade will decrease by 13 percent this year in the optimistic scenario, where a rapid and short-term “V” type recovery is expected, and by 32 percent in the pessimistic scenario, in which an “L” type recovery is expected, where economic recovery does not occur for a while.
WTO economists expect the expected decline in global trade this year to exceed the trade loss experienced during the 2008-2009 global financial crisis.
Asia’s exports will decrease by 36.2 percent in the worst-case scenario
When examined on a regional basis, it is estimated that there will be double-digit declines in global trade this year under both scenarios.
International exports from the Asian region, where China is the world’s largest exporter of goods, are expected to decrease by 13.5 percent this year in the optimistic scenario and by 36.2 percent in the pessimistic scenario. It is predicted that imports of this region will decrease between 11.8 percent and 31.5 percent in the same period.
It is estimated that exports from the North American region, where the United States is the second largest exporter of goods, will decrease by 40.9 percent with this 17.1 percent. The region’s imports are expected to decrease between 14.5 percent and 33.8 percent in this period.
It is predicted that Europe’s exports will decrease between 12.2 percent and 32.8 percent this year, and its imports will decrease between 10.3 percent and 28.9 percent.
Trade in the electronics and automotive sectors will shrink further
The Covid-19 epidemic is expected to cause a structural change in global trade, as well as a volumetric and value decline. Although it is not yet clear how this change will occur, experts warn that the epidemic may increase protectionist actions in global trade.
WTO Information and Foreign Affairs Director Keith Rockwell said in a statement to AA correspondent that the Covid-19 epidemic will have deep economic effects, including trade.
Explaining that service trade was directly affected by the epidemic due to restrictions in the retail, accommodation and transportation sectors, Rockwell said, “Trade in sectors with complex value chains, especially in electronics and automotive products, will decrease more sharply.” said.
Expectation of a recovery in trade between 21 percent and 24 percent in 2021
Rockwell emphasized that a rapid and strong recovery depends on the speed of control of the epidemic and the impact of the measures implemented by governments, and noted that an increase of 21 percent to 24 percent in trade is expected in 2021.
Stating that 55 percent of the measures taken by countries since the beginning of the crisis were measures to facilitate trade, Rockwell stated that more than 80 measures, especially restricting the export of medical equipment such as masks, gloves and ventilators, were also implemented.
“The response of governments will affect the future of trade”
Touching on how the Covid-19 epidemic will change the global trading system in the future, Rockwell said that this is not clearly known, but some changes are inevitable.
Rockwell continued:
“The response of governments to this crisis will affect how trade will be in the future. How long will export restrictions last? What will the impact of financial incentives be on trade and how long will these incentives remain in effect? Remember that the structure of global trade had already undergone a significant change before the pandemic. Trade tensions, “The decline in growth and the backlash against globalization have led some governments to introduce more restrictive trade policies.”
“The last thing we need is protectionist actions”
Pointing out that technological developments also affect the global trade system, Rockwell said, “We have been witnessing major changes in the global supply chain for a while due to technological advances such as 3D printing, artificial intelligence and automation. These developments in technology and the trade tensions in recent years have forced manufacturers to reconsider where they buy their products.” “The needs to combat climate change also influenced producers’ decisions regarding their resources.” he said.
Rockwell emphasized that things were made worse by trade restrictions and said, “Trade will be an indispensable tool that can help us get out of this crisis. The last thing we need at this stage is protectionist actions.” made his assessment.
Era of reverse globalization
Peterson Institute for International Economics (PIIE) Senior Expert Gary Hufbauer also said that they expect global trade to decrease by 24 percent in 2020 compared to last year.
Pointing out that this situation reflects the problems in the supply chain, depletion of stocks and the decrease in demand, Hufbauer said, “In the long term, in the next 2-3 years, we will probably see an increase in protectionist reactions, which will limit the recovery in trade after the Covid-19 epidemic is taken under control.” said.
Recalling the restrictions imposed by countries on the export of medical supplies and some agricultural products, Hufbauer said, “We are probably facing a period of reverse globalization.” he said.
Stating that there will be a slower growth in trade and foreign direct investments after the Covid-19 epidemic is taken under control, Hufbauer stated that digital technologies such as e-commerce and data flow will gain more importance.
Source: https://www.aa.com.tr/tr/ekonomi/kuresel-ticarete-kovid-19-darbesi-/1836391
