As prepared for delivery
Excellencies, Ministers of Trade, and other distinguished participants. Thank you for the opportunity for the World Bank Group (WBG) to share a few thoughts at this important meeting.
As noted by previous speakers, we are facing the most significant adverse shock the world has experienced in post-war history, with unprecedented health, social, and economic impacts. Under various scenarios, the global economy is projected to go into a deep recession, worse than the 2008 Global Financial Crisis.
The WBG is especially concerned with the impact on emerging markets and developing countries. On top of the initial disruption of global supply chains, a combination of domestic demand and supply shocks has generated cross-border spillovers through travel, trade, finance, commodity markets and investor confidence. The disruption is now hitting critical trade nodes. Seventeen countries with the highest COVID-19 cases are vital nodes in the global trade network.
Developing countries are at risk due to the limited supply of medical goods. Global markets for the 17 products identified by the World Health Organization as key to addressing the COVID-19 pandemic are highly concentrated. The poorest countries are extremely vulnerable to policies in exporting countries, including trade restrictions on medical supplies – on top of the risk of being priced out of the markets by richer countries.
Many countries tax their own health care systems and hamper the response by imposing tariffs on imports of key COVID-19 products. Applied tariffs on these products are below 4 percent in advanced economies, above 8 percent in developing economies and exceed 11 percent in least developed economies.
We suggest G20 Trade Ministers decide on concrete actions to mitigate the pandemic and speed up recovery. G20 Members could immediately undertake the following actions whilst advocating parallel action by all World Trade Organization Members.
- Refrain from new export restrictions on critical medical supplies, food or other key products. Where such emergency measures are applied, they should be targeted, transparent, proportionate with the emergency needs, and time-bound.
- Eliminate or reduce tariffs on imports of COVID-19 products, as well as lower or temporarily suspend tariffs and export taxes on food and other basic goods to safeguard household incomes and business activity.
- Ensure that vital products can cross borders safely, by ensuring continuity of border agency clearance for critical supplies and essential transport and logistics.
- Secure continued access to capital and trade financing to medium, small and micro enterprises (MSMEs).
The WBG is providing fast, flexible responses to lessen the impact of COVID-19 on developing countries. The $14 billion Fast Track Facility approved on March 17 assists countries and companies in their efforts to prevent, detect, and respond to the rapid spread of COVID-19. We have emergency operations for 60 countries already underway and more to come.
We are entering into the next phase of our response to further address the broader economic and social impact. The WBG will deploy $160 billion over 15 months to:
- Protect the poor and vulnerable through social safety net programs.
- Offer World Bank facilitated procurement to help clients access needed medical supplies and equipment, for no fee, to address the significant disruption in supply chains.
- Support businesses and their employees, especially MSMEs, through IFC trade and credit lines.
- Strengthen economic resilience and speed of recovery through budget support and sectoral interventions, including in trade and investment.
We and the IMF are also calling on all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.
We stand ready to continue to provide input and knowledge to the G20 and all development partners.
Current uncertainties affect all countries. International cooperation is the only way to overcome this.
Continued international cooperation to maintain an open and rules-based trading system will be essential for recovery and sustainable and inclusive development. There is overwhelming empirical evidence that trade brings faster growth and poverty reduction.
Countries that remain globally integrated will be best placed to respond effectively in the short term, and to recover more rapidly over the medium and long term. Going it alone is not an option. We will come out much stronger if we all work together with a clear focus on the future.