WTO: Coronavirus may be worse than financial crisis

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The financial crash more than a decade ago could be dwarfed by coronavirus, the WTO has suggested.

The World Trade Organisation (WTO) has predicted the impact of the coronavirus pandemic on the global economy could be worse than that of the financial crisis in 2008-09.

In a statement, director-general Roberto Azevedo warned trade could fall by as much as a third as factories and businesses are forced to remain closed and borders tighten.

The WTO suggests the actual figure could be anywhere between 13 and 32 per cent because there is so much uncertainty surrounding when the pandemic will peak and ease off again.

During the worst of the financial crash more than a decade ago, trade only dropped by 12.5 per cent.

In a best-case scenario, there may be a steep decline in trade followed by a recovery that begins some time in the latter part of 2020 as nations begin to get on top of the crisis.

However, there is also a worst-case scenario where there is an ongoing decline and therefore a more delayed and prolonged recovery, which may result in the higher figures quoted.

"These numbers are ugly and there is no way around that. The pandemic cut the fuel line to the engine. The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself," Mr Azevedo said at a news conference.

He said he is hopeful world trade will begin "a rapid and vigorous rebound" next year, but pointed out this will only be possible if countries work together to get out of the recession.

Indeed, in what may be a reference to the ongoing trade war between the US and China prior to the outbreak of coronavirus, Mr Azevedo particularly warned against adopting protectionist measures that could create new shocks to the fragile economy.

The WTO said it hopes to see world trade grow again in 2021 by as much as a quarter, although this depends on when the pandemic ends and the subsequent policy responses.