Last reviewed 1 July 2020

Not surprisingly, world trade fell sharply in the first half of the year, as the Covid-19 pandemic disrupted the global economy.

The volume of merchandise trade shrank by 3% year‑on‑year in the first quarter (Q1), according to World Trade Organisation (WTO) statistics. Initial estimates for Q2, when the virus and associated lockdown measures affected a large share of the global population, indicate a huge year‑on‑year drop of around 18.5%. These declines are historically large but, according to WTO Director-General Roberto Azevêdo, they could have been much worse as rapid government responses helped temper the contraction.

The WTO's April 2020 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, Mr Azevêdo pointed out, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection.

“The fall in trade we are now seeing is historically large – in fact, it would be the steepest on record,” he said. “But there is an important silver lining here: it could have been much worse.”

However, he warned, there is no room for complacency as, for output and trade to rebound strongly in 2021, fiscal, monetary, and trade policies will all need to keep pulling in the same direction. The positive signs highlighted by the WTO suggest that trade may have possibly bottomed out in Q2 of 2020.

Global commercial flights, which carry a substantial amount of international air cargo, were down 74% between 5 January and 18 April but have since risen 58% up to mid-June. Container port throughput also appears to have staged a partial recovery in June compared to May. Meanwhile, indices of new export orders from purchasing managers' indices also started to recover in May after record drops in April.