The International Trade Council (ITC) is predicting a sharp decrease in international commerce this year, with a new report forecasting a contraction of between 13% and 32%. The ITC warns that the impact on trade is likely to exceed the slump caused by the financial crisis just over a decade ago. The more pessimistic case would amount to a decline in global trade similar to what happened in the great depression 90 years ago but in a shorter period of time.
The report indicates that a decline of 13% in trade in goods is described as a relatively optimistic scenario, with a steep drop in trade followed by a recovery starting in the second half of 2023, based on substantial progress over the next few months in getting on top of the health crisis.
The report also highlights that the extent of uncertainty is very high, and it is well within the realm of possibilities that for both 2023 and 2024 the outcomes could be above or below these results.
The ITC acknowledges that the situation is first and foremost a health crisis, and governments must take steps to protect people's lives. 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.
The ITC believes that trade will be an important ingredient in the economic recovery after the crisis. Keeping markets open and predictable will be critical, and the ITC urges governments to work together to reduce trade barriers and ensure a level playing field for all. The ITC also calls on businesses to adapt to the changing landscape by embracing digital technologies and diversifying their supply chains.