PRESS/858  
 
23 June 2020  
(20-4367) Page: 1/6 
    
 
PRESS RELEASE  
TRADE STATISTICS AND  OUTLOOK   
Trade falls steeply in first half of 2020  
World trade fell sharply in the first half of the year , as the COVID -19 pandemic upended the global 
economy. However, rapid government responses helped temper the contraction , and WTO 
economists now believe that while trade volumes will register a steep decline in 2020, they are 
unlikely to reach the worst -case scenario projected  in April.  
 
The volume of merchandise trade  shrank by 3% year -on-year in the first quarter according to WTO 
statistics . Initial estimates  for the second quarter, when the virus and associated lockdown 
measures affected a large share of the global population,  indicate a year -on-year drop of around 
18.5% (Chart 1). These declines are historically large , but could have been much worse. The 
WTO's 20 April  annual trade forecast, in light of  the large degree of uncertainty around the 
pandemic’s  severity and  economic impact , set out two plausible paths: a  relatively optimistic 
scenario in which the volume  of world merchandise trade in 2020 would contract by  13%, and a 
pessimistic scenario in which trade would fall by 32% . As things currently stand , trade would only 
need to grow by  2.5% per quarter for the remainder of the year  to meet the optimistic  projection . 
However, looking ahead to  2021, adverse developments, including a second wave of COVID -19 
outbreaks , weaker than expected economic growth, or widespread recourse to trade restrictions, 
could see trade expansion fall short of earlier projections.  
 
"The fall in trade we are now seeing  is historically large – in fact, it would be the steepest on 
record. But there is an important silver lining here: it could have been much worse,” said 
Director -General Roberto Azevêdo.  "This is genuinely positive news  but we cannot afford to be 
complacent. Policy decisions have been critical in softening the ongoing blow to output and trade, 
and they will continue to play an important role in determining the pace of economic recovery. For 
output and trade to rebound strongly in 2021, fiscal, monetary, and trade policies will all need to  
keep pulling in the same direction. " 
 PRESS/858  
 
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  Chart 1: World merchandise trade volume, 200 5Q1-2021Q4  
(Index, 20 15=100)  
 
Source:  WTO/UNCTAD and WTO Secretariat estimates.  
In light of available trade data for the second quarter, the April forecast’s pessimistic scenario, 
which assumed even greater health and economic costs than what  had transpire d, appears less 
likely, since it implied sharper declines in the first and second quarters.  
 
The COVID -19 pandemic and associated containment efforts intensified in the second half of 
March. Strict social distancing measures and restrictions on travel and transport were fully in effect 
in most countries throughout April and May , and are now increasingly being relaxed. These 
developments are reflected in a variety of economic indicators which, taken together , suggest 
trade may  have possibl y bottom ed out in the second quarter of 2020. Global commercial flights, 
which carry a substantial amount of international air cargo, were down nearly three quarters 
(-74%) between  5 January and 18 April , and have since risen 58% through mid -June (Chart 2).  
Containe r port throughput also appears to have staged a partial recovery in June compared to May 
(Chart 3). Meanwhile, indices of new export orders from purchasing managers' indices also started 
to recover in May after record drops in April (Chart 4). It is useful  to keep in mind that these 
rebounds follow historic or near -historic declines , and will need to be monitored careful ly before 
drawing any definitive conclusions about the recovery.  
 
Looking ahead to next year , a slower -than-expected pace of economic reco very would weigh on 
trade growth . This possibility is illustrated by the dotted green line in Chart 1, which would see 
trade growth for 2021 come in at closer to 5% , which would leave it well below the pre -pandemic 
trajectory . On the other hand, a quick re turn to its  pre-pandemic trajectory would imply trade 
growth in 2021 of around 20%, in line with the April forecast’s  optimistic scenario. Monetary, fiscal 
and trade policy  choices will play a significant role in determining  the pace of recovery .1 
 
1 It should be noted that growth rates derived from quarterly merchandise trade volume indices are generally close but not exactly equal to growth rates derived 
from annual statistics. 
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Merchandise trade volume Optimistic scenario Weaker recovery
Pessimistic scenario Pre-pandemic trendPRESS/858  
 
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  The outl ook for the global economy over the next two years remains highly uncertain. This is 
reflected in the range of GDP estimates from other international organizations, in some cases 
relying on multiple scenarios (Table 1). The World Bank, OECD and IMF have al l released forecasts 
showing significant slowdowns in global trade and GDP ; all are broadly consistent with the WTO's 
forecast  for the current year . The World Bank's recent forecast would see global output decline by 
5.2% in 2020, falling between the WTO's  optimistic and pessimistic range. Other international 
organizations ' GDP forecasts for 2020 are also increasingly negative, even as their trade 
projections stay roughly in line  with the WTO's optimistic scenario. These estimates imply  a less 
negative trad e response to declining GDP growth than was observed during the global financial 
crisis of 2008 -09. 
 
Table 1: Summary of recent forecasts for world GDP and trade  
 
Source:  WTO Secretariat, International Monetary Fund, World Bank, Organisation for Economic Cooperation 
and Development, Federal Reserve Bank of Philadelphia, European Central Bank.  
Note: Headline GDP figures from OECD and IMF are at purchasing power parity while figures from the 
World Bank and WTO are weighted at market exchange rates. WTO trade volume figures refer to 
merchandise trade while other organizations refer to goods and services trade.  
The responsiveness of trade to changes in income can be measured by the ratio of the growth of 
merchandise trade volume s to real GDP growth at market exchange rates, also referred to as the 
income elasticity of trade. The implied elasticity under the WTO's optimistic forecast for 2020 
was 5.3 – in line with that seen during the financial crisis . However, if world GDP instead contracts 
by the Worl d Bank's  estimated  5.2% with a trade decline of 13.4% , the elasticity would only 
be 2.6.2 Lower elasticity implies trade holds up better for a given fall in income.  
 
There are several reasons why trade might respond less to changes in GDP than it did durin g the 
financial crisis. First, fiscal and monetary policies have arguably been rolled out more quickly and 
on a larger scale in the current crisis than they were in 2008 -09. The WTO forecast scenarios did 
not includ e an attempt to model either  set of  policy response s, since, at the time , these policies 
were just being introduced. Second, income support to households and expectation s that the 
 
2 Implied elasticities for 2020 from the IMF are within this range while those from the OECD are lower, 
but these are not directly comparable to WTO forecasts since GDP growth is measured at purchasing power 
parity rather than at market exchange rates.  
2020 2021 2020 2021 2020 2021
WTO Trade forecast (April 2020)
  - optimistic scenario -2.5 7.4 -12.9 21.3 5.3 2.9
  - pessimistic scenario -8.8 5.9 -31.9 24.0 3.6 4.1
IMF World Economic Outlook (April 2020) -3.0 5.8 -11.0 8.4 3.6 1.4
World Bank Global Economic Prospects (May 2020) -5.2 4.2 -13.4 5.3 2.6 1.3
OECD Economic Outlook (June 2020)
  - single hit scenario -6.0 5.2 -9.5 6.0 1.6 1.1
  - double hit scenario -7.6 2.8 -11.4 2.5 1.5 0.9
Memo items:
   IMF GDP at market exchange rates -4.2 5.4 -11.0 8.4 2.6 1.6
   World Bank GDP at purchasing power parity -4.1 4.3 -13.4 5.3 3.3 1.2Real GDP Trade volume Elasticity
(% change) (% change) (ratio)PRESS/858  
 
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  pandemic would  eventually ease may have encouraged consumers to maintain consumption levels 
at a higher level than expected. Finally, much of the decline in output has been concentrated in 
non-tradeable services such as hospitality, personal services and entertainment, which tend to be 
less import -intensive than manufacturing.  
 
Although purchases of consumer durab les such as automobiles fell sharply earlier in the crisis 
(Chart 5), other  economic sectors have shown signs of resilience in recent weeks. Sales of 
consumer electronics have thus far held up better than might have been expected , support ing 
international trade in these products . For example, according to China's customs statistics, the 
country's exports of automatic data processing machines , including computers , were up 30% year-
on-year in US dollar terms in April.  Anecdotal evidence similarly  points to st rong demand for 
computer and information technology services, which have facilitated working from home during 
the crisis.  
 
Automobile sales have also rebounded from recent, though admittedly extreme, lows. For 
example, sales of cars in China were up 5% ye ar-on-year in May after falling 79% in February. Car 
sales in Western Europe and the United States were still down sharply in May compared to last 
year, but declines were smaller than in the previous month. Increased purchases of consumer 
durables could be  seen as a bellwether signalling renewed consumer confidence as lockdowns are 
lifted and economies start to revive . They will thus be closely monitored in the coming months.  
 PRESS/858  
 
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  Chart  2: Global commercial  flights  per day tracked by FlightRadar  
(number of flig hts) 
 
Source:  FlightRadar.  
Chart 3: Global container throughput, January  2007 - June  2020  
(seasonally adjusted index, 2015=100)  
 
Source:  Institute for Shipping Economics and Logistics through April  2020, WTO Secretariat  estimates  based 
on UN Comtrade AIS global/regional port calls for May and June.  
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  Chart 4: New export orders from purchasing managers' indices, January  2008 – 
May 2020  
(Index, base=50)  
 
Note:  Values greater than 50 indicate expansion while values less than 50 denote contraction.  
Source:  JPMorgan/IHS Markit.  
Chart 5: Automobile sales in selected economies  
(Year -on-year % change)  
 
Source:  Federal Reserve Bank of St. Louis, China Association of Automobile Manufacturers, European 
Association of Automobile Manufacturers  
 
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