Least developed countries hit hard by trade downturn triggered by COVID-19 pandemic
Least developed countries (LDCs) have been hit hard by the downturn in global trade triggered by the COVID-19 pandemic, with LDC merchandise exports declining by 16 per cent during the first half of 2020, WTO members were told at a meeting of the WTO’s Sub-Committee on LDCs held on 11 November.
The WTO Secretariat reported that the decline in the value of LDC merchandise exports was steeper than the 13 per cent average decline in global exports registered in the first six months of the year. The LDC services sector also took a hit, with preliminary estimates suggesting a drop of close to 40 per cent in the first six months of 2020. The LDCs also had a subdued trade performance in 2019, with their share in world exports (goods and services combined) remaining static at around 0.96 per cent.
The impact of the pandemic on LDC trade was a special focus of the Secretariat's latest annual report on market access for products and services of export interest to LDCs.
COVID-19 and beyond: What role for LDCs?
By Paul Akiwumi, Director for Africa and Least Developed Countries, UNCTAD
As the world seeks to recover from the COVID-19 pandemic and the ensuing global recession, there is a temptation to prioritise domestic health and economic concerns, especially in advanced economies.
But resorting to inward-looking policies or protectionism threatens to leave behind the world’s most vulnerable economies or least-developed countries (LDCs). In responding to the global challenge posed by COVID-19 and building back better for long-term prosperity, the international community must not forget LDCs.
Why LDCs matter
An estimated 1.06-billion people live in the world’s 47 LDCs and by 2030 over 15% of humanity will be living in them. Despite their large demographic weight, LDCs account for less than 1.5% of global GDP. In 2019, the average GDP per capita in LDCs was only $991, compared with a world average of $11 069.
COVID-19 cuts global maritime trade, transforms industry
The pandemic has sent shockwaves through global maritime transport and laid the foundations for a transformed industry and associated supply chains. UNCTAD expects a return to growth in 2021
Global maritime trade will plunge by 4.1% in 2020 due to the unprecedented disruption caused by COVID-19, UNCTAD estimates in its Review of Maritime Transport 2020, released on 12 November.
The report warns that new waves of the pandemic that further disrupt supply chains and economies might cause a steeper decline. The pandemic has sent shockwaves through supply chains, shipping networks and ports, leading to plummeting cargo volumes and foiling growth prospects, it says.
According to the report, the short-term outlook for maritime trade is grim. Predicting the pandemic’s longer-term impact as well as the timing and scale of the industry’s recovery is fraught with uncertainty.
Global foreign direct investment falls 49%, outlook remains negative
The biggest drops occurred in developed countries, cutting across all major forms of foreign direct investment.
Global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019, due to the economic fallout from COVID-19, reveals UNCTAD’s latest Global Investment Trends Monitorreleased on 27 October.
In the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.
“The FDI decline is more drastic than we expected, particularly in developed economies. Developing economies weathered the storm relatively better for the first half of the year,” said James Zhan, UNCTAD’s investment and enterprise director. “The outlook remains highly uncertain.”
Developed economies suffer steepest fall
According to the report, developed economies saw the biggest fall, with FDI reaching an estimated $98 billion in the six-month period – a decline of 75% compared to 2019.
The trend was exacerbated by sharply negative inflows in European economies, mainly in the Netherlands and Switzerland. FDI flows to North America fell by 56% to $68 billion.
Members indicate strong preference for Ngozi Okonjo-Iweala as DG but US objects
General Council Chair David Walker of New Zealand and his two co-facilitators in the selection process to choose the WTO’s next Director-General told the organization’s members on 28 October that based on their consultations with all delegations the candidate best poised to attain consensus and become the 7th Director-General was Ngozi Okonjo-Iweala of Nigeria.
“She clearly carried the largest support by Members in the final round and she clearly enjoyed broad support from Members from all levels of development and all geographic regions and has done so throughout the process. I am therefore submitting the name of Ngozi Okonjo-Iweala as the candidate most likely to attract consensus and recommending her appointment by the General Council as the next Director-General of the WTO until 31 August 2024,” Amb. Walker said.
Amb. Walker stressed at a Heads of Delegation meeting on 28 October that this was the assessment of the “troika” of facilitators and that a formal decision had to be taken by the members at a General Council meeting, which he has scheduled for 9 November. The General Council is the WTO's pre-eminent decision making body, save for the Ministerial Conference which normally meets every two years.
Global trade shows frail recovery in third quarter, but outlook remains uncertain
UNCTAD estimates show a 5% drop in world trade in the third quarter of 2020 compared to 2019, an improvement from the 19% decline in the second quarter but insufficient to pull trade out of the red.
Global trade recorded a 5% drop in the third quarter of 2020 compared with the same period last year, according UNCTAD’s new Global Trade Update published on 21 October.
This marks an improvement on the 19% year-on-year plunge recorded in the second quarter, and UNCTAD expects the frail recovery to continue in the fourth quarter, with a preliminary forecast of -3% compared with the last quarter of 2019.
Depending on how the COVID-19 pandemic evolves in the winter months, the UN trade and development body expects the value of global trade to contract by 7% to 9% with respect to 2019.
“The uncertain course of the pandemic will continue aggravating trade prospects in the coming months,” UNCTAD Secretary-General Mukhisa Kituyi said. […]
New WTO publication addresses common questions about trade and the environment
The WTO launched a new publication to answer commonly raised questions about trade and the environment at a virtual event on 16 October. “Short Answers to Big Questions on the WTO and the Environment” explores trade’s impact on the planet, the policies that governments enact to protect it and the role of the WTO regarding environmental issues.
"Environmental issues are woven into the history of the multilateral trading system. But the role of trade and the WTO on the environment is complex, and as a result, it is not always well understood," Deputy Director-General Alan Wolff said at the event. "The short answers to the big questions that we are launching today serve as signposts that can guide us on the road towards a WTO that works better for people, the planet and prosperity in the 21st century." […]
WTO publishes list of COVID-19 support measures adopted by members
The WTO has posted a list of economic support measures adopted by WTO members in response to the COVID-19 pandemic. The list is available on the WTO’s dedicated COVID-19 web page.
The list contains support measures communicated by members and observers to the WTO Secretariat as of 6 October through the WTO's Trade Monitoring exercise. It is an informal situation report and an attempt to provide transparency with respect to support measures taken in the context of the COVID-19 crisis. It does not pass judgment on or question the right of WTO members to take such actions. The measures in the list are not categorized and no assessment of their potential relation to trade is made. […]
Global partnership to make available 120 million affordable, quality COVID-19 rapid tests for low- and middle-income countries - 28 September 2020
- A full access package includes WHO policy guidance on the use of antigen-based rapid diagnostic tests, manufacturer volume guarantees for low and middle-income countries, catalytic funding to assist governments to deploy the tests and an initial US$50 million procurement fund
- Several rapid, point-of-care antigen tests are being assessed by WHO for Emergency Use Listing (EUL)
- Agreements between the Bill & Melinda Gates Foundation and test manufacturers Abbott and SD Biosensor make available innovative tests priced at a maximum of US$5 for low- and middle-income countries (LMICs)
- The Global Fund commits an initial US$50 million to enable countries to purchase the new tests, with the first orders expected to be placed this week
- Expedited market introduction of these tests in multiple LMICs is being supported through the Africa Centres for Disease Control and Prevention (Africa CDC), Unitaid, FIND, CHAI, and their partners
- This is the latest move from the Access to COVID-19 Tools (ACT) Accelerator to develop, procure and distribute critical new tools to fight the pandemic; new tests are urgently needed to meet the huge unmet needs for testing worldwide […]
Fact sheet: U.S. Humanitarian and Health Assistance Response to COVID-19
The U.S. government is leading the world’s humanitarian and health assistance response to the COVID-19 pandemic. We are mobilizing all necessary resources to respond rapidly, both at home and abroad. As part of this comprehensive and generous U.S. response, the State Department and USAID are providing an initial investment of nearly $274 million in emergency health and humanitarian assistance to help countries in need, on top of the funding we already provide to multilateral organizations such as the World Health Organization and UNICEF.