The WTO warns that the coronavirus pandemic could create another Great Depression

As authorities across the globe asked or mandated people to stay home to slow the spread of the novel coronavirus, they may have also triggered a plunge in global trade that hasn't been seen since the Great Depression, according to the World Trade Organization.

The result will be "painful consequences" for households and businesses across the globe, WTO Director-General Roberto Azevêdo said in a statement Wednesday. Even the WTO's most optimistic forecast for global trade amid the pandemic, a 13% reduction, is worse than what happened during that Great Recession. A plunge the size of the Geneva-based organization's most pessimistic prediction, 32%, hasn't been seen since the Great Depression in the 1930s.

"These numbers are ugly — there is no getting around that," Azevêdo said in a statement. "But a rapid, vigorous rebound is possible ... 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."

The WTO's projections of global trade best- and worst-case scenarios. 

The WTO also said that it expects trade to recover in the next year, but only if current social distancing policies succeed in slowing the virus' spread. Slowing economic growth and heightening tensions between the U.S. and China were already hampering global trade before the outbreak began, according to the WTO, making the pandemic's effects that much more severe.

The outbreak has already dealt a substantial blow to the US economy. More than 16.8 million Americans have filed for unemployment benefits in the past three weeks alone, and fear of the outbreak erased nearly four years of gains from the stock market.

The US has reported more cases of the novel coronavirus than any other country — 428,900 at the time of publication — including 14,692 deaths. The outbreak of the virus and the debilitating respiratory illness it causes were first identified in Wuhan, China, in December, and has since been declared a pandemic by the WHO.

Source: Business Insider UK