WTO Projects US Exports to Fall at Least 14% This Year
The World Trade Organization is forecasting a huge hit to trade around the world, but how bad it will be depends on how long the lockdowns persist, the organization said April 8. In an optimistic scenario, restrictions on movement are lifted after three months. In a pessimistic scenario, they're lifted (or partially lifted) after six months. And in the worst-case scenario, the stay-at-home orders last for a year, and even after they're over, a lot of the people who lost their jobs do not get back to work, so big-ticket purchases like cars and major appliances continue to be depressed in 2021.
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The WTO forecasted that the value of exports, adjusted for inflation, from the U.S. would fall 14.3% in 2020 in the optimistic model, 27.8% in the pessimistic, and 33.9% in the worst-case scenario. The following year, exports would grow by 10% in the best case, by 23.8% in the middle forecast, and by 10.9% in the worst-case scenario. “These numbers are ugly -- there is no getting around that. But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects,” said Roberto Azevedo, WTO's director general.
Globally, the pessimistic forecast projects a drop in trade of 17%, and the optimistic forecast is a drop of 9%. The worst-case projection is a drop in trade of 20%. “In the V-shaped recovery the health effects of the pandemic and related social distancing measures are assumed to disappear relatively quickly. Improved weather conditions ease the spread of the virus such that social distancing measures can be relaxed. Or an effective medical treatment of the virus infection is discovered such that the virus can be treated without a heavy burden on the medical infrastructure,” the report said.
In the middle range of the forecast, economists projected that economic activity resumes after six months, either because medicines are available or because they figure out ways to operate firms while still protecting the most vulnerable. But in that scenario, international travel is still restricted. The worst-case scenario assumes a vaccine is available in a year, and that the lockdowns continue until then.