Global trade in goods and services is projected to slow down in the first quarter of 2021, relative to the fall in the fourth quarter of 2020, according to a UNCTAD report.

The projections for the first quarter of 2021 indicates a slow down in the recovery of trade in goods (a 1.5 percent drop relative to Q4 2020) and a further decline for trade in services (a 7 percent drop relative to Q4 2020), largely because of continued disruptions in the travel sector. However, projections are likely to be imprecise due to persisting concerns about COVID-19 and uncertainty about the magnitude and timing of stimulus packages in some major economies, the report notes.

In the Global Trade Update report released this month, the economic and social disruptions that resulted due to the COVID-19 pandemic greatly affected global trade in 2020. Overall, world trade recorded a drop in value of about 9 percent in 2020, with trade in goods declining by about 6 percent and trade in services decreasing by about 16.5 percent.

An overview of trade in 2020 showed that the effect of COVID-19 on global trade was most severe during the first half of 2020 with a drop in value of about 15 percent. Global trade began to recover in the third quarter of 2020 and more strongly in the fourth quarter of 2020. The recovery in the second half of 2020 was largely due to the rebound of trade in goods. This notwithstanding, trade in services continue to lag substantially below average throughout the period. In the fourth quarter of 2020, global trade in goods grew by about 8 percent on a quarter-on-quarter basis while trade in services stagnated during the third quarter of 2020 levels.

The report also highlights that the pandemic has negatively impacted on relative competitiveness in global markets with some economies capturing higher market shares in certain sectors while losing it in others.

“The fall in global demand brought by COVID-19 has forced least competitive suppliers out of global markets, while enabling the most competitive suppliers to thrive during the recovery process,” the report says.

Moreover, import and export trends for some of the world’s major trading economies further illustrate how trade patterns changed during 2020. In the first half of 2020, all major economies experienced significant downturns in both imports and exports of goods, with even heavier declines in the trade of services. Although improvements have been seen from declines earlier in 2020, the value of trade remained lower for nearly all major economies in the third quarter of 2020.

An exception to this trend was registered by China as Chinese goods exports grew by around 3 per cent. In the fourth quarter of 2020, while trade in goods declined substantially across many major economies, trade in services, in contrast, remained below averages. Notably, exports of services from China, and to a lesser extent India, appear to have fared relatively better than other major economies throughout 2020.

According to the report, countries such as China, Switzerland, Taiwan (province of China), Turkey, Uganda, and Viet Nam experienced relatively better export performance in 2020 while Colombia, Nigeria, Saudi Arabia, and Venezuela performed relatively worse last year.