With the theme of "Economic Resilience and Trade", the "2021 World Trade Report" discusses the interrelated reasons for the fragility and resilience of the global trading system in crises, how trade can help countries improve their ability to withstand economic shocks, and how to make the trading system better. Be more flexible to future changes.
The report pointed out that the health and economic crisis triggered by the epidemic is a large-scale test of the strength of the world trading system. It has had an unprecedented impact on global supply chains and trade relations between countries. In 2020, the value of global trade in goods and services in nominal U.S. dollars will fall by 9.6%, and global GDP will fall by 3.3%. This is the worst recession since World War II.
However, it turns out that the trading system is more resilient than many people expected when the crisis began. Although the epidemic severely disrupted the flow of international trade at the beginning, the supply chain quickly adapted, goods continued to flow across borders, and many economies gradually began to recover.
During a pandemic, the global trading system helps countries respond to the epidemic by facilitating access to key medical supplies, food, and consumer goods, and supporting economic recovery.
According to the latest WTO forecast, global economic output (calculated at market exchange rates) is expected to increase by 5.3% in 2021. This is due in part to the strong recovery of commodity trade, which is expected to grow by 8% in 2021. However, trade in services continues to be sluggish.
The report conveyed three main messages:
First, today's highly interconnected global economy, characterized by deep trade ties, makes the world more vulnerable to shocks, but also more resilient to shocks. For example, it enables countries to respond to shocks by switching suppliers when a crisis disrupts established supply relationships, whether domestic or foreign. Companies involved in trade, especially export companies, are more likely to survive the economic downturn because their average productivity is higher than that of companies in the non-export sector, and they often have access to more diversified markets.
Secondly, policies aimed at improving economic resilience by de-integrating trade, such as returning production and promoting self-sufficiency, often have the opposite effect and effectively reduce economic resilience. In the long run, such policies will almost inevitably reduce the efficiency of the country’s economy, because they will eventually push up the prices of goods and services and limit the availability of products, components, and technologies.
Third, enhancing economic resilience requires more global cooperation. With the support of strong international trade rules, more trade cooperation at the multilateral or regional level can support various domestic strategies deployed to avoid and mitigate risks, and to prepare, manage, and restore shocks. To this end, it is essential to strengthen and develop the existing cooperation between the WTO and international and regional organizations, and to promote coordination, coherence and mutual support in areas ranging from risk prevention, disaster relief and public health to climate change, environmental protection and financial stability will Further support the resilience in the face of future crises.
The report also pointed out that although trade and trade policies can play an important role in building and supporting economic resilience, they cannot overcome other obstacles. In view of the wide range of risks and shocks and the cross-cutting nature of economic resilience, it is imperative to strengthen cooperation between the WTO and international and regional organizations that specialize in economic resilience. Risk prevention, disaster relief, public health, climate change, environmental protection, and financial stability are the keys to building and supporting economic resilience.