Trade rates will decline between 13 to 32 percent due to Coronavirus pandemic as the economic activity and social life is profoundly damaged.
According to the World Trade Organization, the post-Coronavirus period will reflect a situation worse than the financial crisis. A double-digit decline in trade volumes for 2020 is expected in nearly all regions and services trade is the most likely to be affected.
In this respect, trade rates during 2020 are subject to the duration of the outbreak and the policies undertaken by the government.
Analysis conducted by WTO experts suggests that:
- Exports from North America and Asia will be hit hardest.
- Trade of electronics and automotive products will experience a steeper decline.
- Due to transport and travel restrictions, the services sector is expected to be the most directly affected.
Trade is about to plummet 13 to 32 percent, and these numbers indicate that the world trade will not recover instantly.
Projection: Trade Volume 2000-2022
The most optimistic scenario suggests that by 2020, world trade will return to the same norms. However, the projection does not take into consideration the effects of social distancing and the change in consumer behavior. In this respect, the situation is not the same as with the financial crisis in 2008, in fact, it is worse.
Whole sectors of national economies have been shut down, including hotels, restaurants, non-essential retail trade, tourism and significant shares of manufacturing and travel and transport restrictions have been imposed.
This course of action by most of the states combined with the social distancing recommendations will profoundly affect the purchasing power. Therefore, any projection is negated by the unpredictability of the situation.
Under these circumstances, there is one variable that is obvious. Trade is to plummet 13 to 32 percent and exports from different countries are currently experiencing huge declines.
Projection: Export and Import rates in 2020 and 2021
The projection suggests a huge decline in export and import rates and if we take into consideration the most pessimistic scenarios, most of the companies will go bankrupt.
Export Counseling recommends that governments around the world undertake the necessary initiatives to inject money into their economies and prioritize providing incentives to export-based companies in the market, as the sole alternative to ensuring their financial stability.
Export Counseling is deeply concerned and is working closely with numerous experts to provide a list of recommendations for companies based on export.
Please continuously check our website the following days for tips on how we can effectively overcome the situation with Coronavirus.