The World Trade Organization (WTO) has revised trend projections in light of the latest statistics, charting world merchandise trade volume and related trade data. The Organization forecasts a 9.2% decline in the volume of world merchandise trade for 2020, followed by a 7.2% increase in 2021.

The expected 2020 decline is less than the drop previously projected by the WTO in April, which forecast a 12.9% decrease even under an “optimistic scenario.”

The WTO cautions however, that the projection is “subject to an unusually high degree of uncertainty” due to dependence on the evolution of the ongoing COVID-19 pandemic and governments’ responses. Further, the 2021 projection falls short of previously-projected growth, which was last forecast at 21.3%. This is in line with the WTO’s “weak recovery” expectation, rather than the more optimistic “quick return to trend” scenario.

Whereas the WTO observes early signs of growth in trade merchandise and an exceeding of short-term projections, gross domestic product (GDP) fell more than expected in the first half of 2020. Projections for the year as a whole show a decline in world market-weighted GDP by 4.8% for 2020, compared to the expected drop of 2.5% released in April.

The WTO examines several upside and downside risks associated with these forecasts. Major factors that could impact the projections include a resurgence of COVID-19 that triggers additional extended lockdowns, which would reduce global GDP and trade growth alike. However, a successful vaccine could buoy both trade volume and GDP, the WTO notes.

By sector, the release shows how certain types of goods trade were impacted quarter-by-quarter, from the fourth quarter of 2019 through the second quarter of 2020. The WTO tracked quarterly year-on-year growth in the USD value of three product groups: agricultural products; fuels and mining products; and manufactured goods. Whereas agricultural products show a marginal decline, fuel and mining products decline by 38% in the second quarter of 2020 relative to Q2 2019. Focusing on the second quarter of 2020, a month-by-month breakdown for specific manufactured goods industries is also available. A WTO designated webpage lists the economic support measures adopted by members in response to the pandemic.

While global merchandise trade dropped precipitously in the second quarter of 2020, the release shows a distinct difference in the way regions were impacted. The sharpest declines – in both imports and exports – were observed in Europe and North America. Asia was not as strongly affected. Additional global data, on international commercial flights and other economic proxies, show a rebound, but “whether they retain their predictive power during the unusual COVID-19 pandemic remains to be seen.” [WTO Press Release] [WTO List of COVID-19 Support Measures]