WTO means massive tax incentives applied by governments and balance sheet Exploded Central Banks G-6with the expected doubling of the Fed’s total assets in 2020 against the backdrop of an avalanche of money printing, which helped stop the collapse of world trade.
An organization in Geneva said that the volume of trade in goods in the first quarter decreased by 3% yoy, and in the second – by 18.5%.
A previous WTO forecast in April outlined two growth patterns: optimistic scenario in which world trade will decline by 13% in 2020, and pessimistic scenario in which trade would fall by 32%.
In the current environment, the report says, “trade will only grow by 2.5% per quarter for the remainder of the year to meet an optimistic forecast. However, an adverse development is expected in 2021, including a second wave of COVID-19 outbreaks, weaker than expected economic growth or widespread use of trade restrictions, could lead to the fact that the expansion of trade will not correspond to previously forecasted indicators.
“The fall in trade that we are currently observing is historically large – in fact, it will be the steepest in history. But there is an important silver pad here: it could be much worse, ”said CEO Roberto Azevedo.
“Political decisions are crucial in mitigating the ongoing blow to production and tradeand they will continue to play an important role in determining the pace of economic recovery. “In order for production and trade volumes to increase sharply in 2021, fiscal, monetary and trade policies will have to continue to move in the same direction,” Azevedo said.
The report says that the dark green line in chart 1 may indicate a rebound from 5% to 20% next year, which corresponds to an optimistic scenario. But there are many uncertainties, including the second wave of the Covid-19 outbreak and the effectiveness of fiscal and monetary policies (which we outlined here)
“In order for production and trade volumes to increase sharply in 2021, fiscal, monetary and trade policies will have to continue to move in the same direction,” Azevedo said.
Summing up, we can say that the prospects for the global economy for the next few years remain very uncertain – although the unprecedented printing of money softens the global collapse in trade – this does not necessarily mean that there will be a recovery in the form of the letter V.