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Law360 (June 23, 2020, 3:32 PM EDT) -- Government policies stopped global trade from sinking to predicted lows not seen since World War II as the coronavirus pandemic kept countries' economies on lockdown, according to a World Trade Organization analysis released Tuesday.
The WTO estimated in a worst-case scenario in April that international trade could fall 32%, creating the greatest dip in international commerce since World War II, but now predicts an 18.5% decline in the second quarter of 2020 as a result of countries' economic policies.
The new prediction falls between the WTO's best- and worst-case scenarios from April. In the best-case scenario, global trade would drop 13%, and in the worst case, trade would fall 32%, according to the WTO.
"There is an important silver lining here: It could have been much worse," WTO Director‑General Roberto Azevêdo said. "For output and trade to rebound strongly in 2021, fiscal, monetary and trade policies will all need to keep pulling in the same direction."
As governments lift travel restrictions and lockdown orders, global trade is incrementally increasing and could recover 5% by the end of 2020, meeting the WTO's best-case scenario, according to the analysis.
Some industries, such as international travel and auto manufacturing, have been hit harder than others during the pandemic, according to the WTO.
International air travel dropped 74% between January and April, but has climbed 58% since mid-June, according to the WTO. While Chinese car sales fell 79% in February, sales were up 5% in May compared to the same time last year, the WTO said.
Throughout the COVID-19 pandemic, consumer electronic purchases have stayed strong, likely as a result of people working from home, according to the analysis.
The WTO noted that its predictions about global trade recovery are not definite and that commerce must be closely monitored for solid conclusions to be reached.
"The outlook for the global economy over the next two years remains highly uncertain," the WTO said.
The International Monetary Fund, the Organization for Economic Cooperation and Development and the World Bank have all released reports in recent months reflecting similar findings to the WTO's predictions.
In April, the WTO and the World Customs Organization called for government leaders to refrain from overly burdensome restrictions on trade in medical supplies in response to the novel virus outbreak.
The organizations' statement aligns with commitments in March from the Group of 20 leading rich and developing nations, which pledged to keep trade channels open and said that any "emergency" steps taken to restrict trade should be "targeted, proportionate, transparent and temporary."
But the WTO found in an April 3 report that personal protective equipment crucial to fighting the coronavirus pandemic faces global tariffs averaging 11.5%, with certain nations collecting duties as high as 65% on items such as hand sanitizer.
--Editing by Stephen Berg.
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