The World Trade Organization (WTO) on Wednesday raised its growth forecast for global goods trade by eight per cent this year — the biggest increase since 2010 — saying that vaccines had given the world a chance of stopping Covid and jump-starting the economy.
WTO director-general Ngozi Okonjo-Iweala said the outlook, however, was clouded by risks from the rollout of coronavirus vaccines and the possible emergence of vaccine-resistant strains.
She warned that Covid-19 continues to pose the greatest threat to the outlook as new waves of infection could undermine any hoped-for recovery.
“A rapid vaccine rollout is the best stimulus for the global economic recovery,” she said. “Only by ramping up vaccines can we get the world economy back to full speed.”
Global GDP fell 3.8 per cent in 2020 — less than forecast — and may expand 5.1 per cent this year and 3.8 per cent in 2022, the WTO said.
The rebound in global trade marks a significant jump from 2020, when the pandemic saw global trade contract by 5.3 per cent, less than the 9.2 per cent decline estimated in October, the WTO said in a report released on Wednesday in Geneva. In 2022, global trade may climb four per cent, it said.
“But this opportunity could be squandered if large numbers of countries and people do not have equal access to vaccines,” Okonjo-Iweala said. Accelerated vaccinations could return trade to its pre-pandemic trend, but slower roll-outs could result in a two percentage-point decrease to the forecast, she said.
“Keeping international markets open will be essential for economies to recover from this crisis and a rapid, global and equitable vaccine rollout is a prerequisite for the strong and sustained recovery we all need,” she said in the report.
A surge in demand for merchandise during the final half of 2020 helped counterbalance Covid-19’s initial disruption to global trade and produced a more muted annual decline than the great recession, when global merchandise trade fell 12 per cent and GDP contracted by two per cent.
The WTO said short-term risks were “firmly on the downside” and centred on pandemic-related factors. The trade body said accelerated vaccine distribution and faster lockdown easing could add 2.5 percentage points to trade, which would then return to its pre-pandemic trend in the fourth quarter.
Okonjo-Iweala plans to meet vaccine manufacturers and civil groups in mid-April to understand how vaccine production could be expanded, particularly in emerging markets, and how investment could be spread wider in future.
“I think that for the next pandemic we must not go through this again. No longer can we expect poor countries to stand in a queue waiting to get vaccines,” she said.
The WTO chief said there were already signs of regional divergence, with Asian exports in 2021 potentially up 10 per cent from 2019 levels, while shipments from Africa and the Middle East could be down.
Over the medium-to-long term, public debt and deficits could also weigh on economic growth and trade, particularly in highly indebted developing countries.
Last year’s decline of trade growth was far less gloomy than previously foreseen. The improvement towards the end of 2020 was partly driven by the announcement of new vaccines at the end of November, boosting confidence.