By Paul Hannon

Global trade flows could fall by almost a third this year, and the scale of any rebound in 2021 is highly uncertain, the World Trade Organization said Wednesday.

The Geneva-based arbiter of trade disputes said that if the measures that have brought many forms of economic activity to a standstill can be lifted soon, trade may start to recover in the second half of this year and fall by 13% compared to 2019.

However, if the lockdowns last longer or have to be repeated, movements of goods across national borders could decline by 32%. A decline of that scale would be much greater than that experienced in the wake of the global financial crisis, and equivalent to the collapse associated with the Great Depression, except concentrated in one year rather than spread over three.

The WTO said flows could rebound strongly in 2021, and by as much as quarter. But that will depend on how durable and credible the lifting of restrictions are.

"A strong rebound is more likely if businesses and consumers view the pandemic as a temporary, one-time shock," the WTO said. "On the other hand, if the outbreak is prolonged or recurring uncertainty becomes pervasive, households and business are likely to spend more cautiously."

Trade flows fell in 2019 as the global economy slowed, and tariffs were hiked in a series of disputes between the U.S. and other major economies. WTO Director-General Roberto Azevedo appealed to governments to forgo future increases in barriers to trade as a way of spurring a wider economic recovery.

"Keeping markets open and predictable, as well as fostering a more generally favorable business environment, will be critical to spur the renewed investment we will need," he said. "And if countries work together, we will see a much faster recovery than if each country acts alone."

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

April 08, 2020 09:16 ET (13:16 GMT)

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