A United Nations report has stated that the value of global trade is set to fall 7 to 9 percent in 2020 from the previous year, despite signs of a fragile rebound led by China in the third quarter.
According to the UN Conference on Trade and Development (UNCTAD), no region was spared by an estimated 19 percent year-on-year plunge in world trade in the second quarter, as the COVID-19 pandemic disrupted economies,
Global trade recovered to a certain degree in the third quarter when it was estimated at about 4.5 percent less than in the same period a year ago, the agency posited in its latest update on 21st October.
“Trade in home office equipment and medical supplies has increased in [the third quarter], while it further weakened in the automotive and energy sectors. Growth in the textiles sector was also strong,” UNCTAD said.
Its preliminary forecast for the fourth quarter is a 3-percent drop in global trade compared with the same period last year, but the report said that uncertainties persisted due to how the pandemic would evolve.
If the pandemic resurges in coming months, it could lead to a deteriorating environment for policymakers and a sudden increase in trade restrictions, it predicted.
China’s exports rebounded strongly in the third quarter after falling in the early months of the pandemic, and have posted year-on-year growth rates of nearly 10 percent, UNCTAD said.
“Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period,” it said.
Chinese demand for imported products recovered following a decline in the second quarter, contrary to other major economies, it said.
In October, the World Trade Organization (WTO) upgraded its forecast for trade in goods due to improvements from June and predicted a drop of 9.2 percent for 2020.
The International Monetary Fund’s Managing Director, Kristalina Georgieva also indicated earlier the global economy is in “less dire” shape than it was in June but risks crashing again if governments end fiscal and monetary support too soon, fail to control the coronavirus and ignore emerging market debt problems.
“My key message is this: The global economy is coming back from the depths of this crisis. But this calamity is far from over. All countries are now facing what I would call ‘the long ascent’ – a difficult climb that will be long, uneven, and uncertain. And prone to setbacks,” she added in a speech.
She urged countries to maintain support for their economies, warning that global growth would stay subdued for the medium term and the risk of “severe economic scarring” was high.
“We are very clear in the message we are communicating to not withdraw support prematurely,” Georgieva said. “If we do so, then we risk massive bankruptcies and massive unemployment.”
WTO’s forecast also saw a more subdued rebound in 2021, with further lockdowns from a second wave of COVID-19 infections posing clear risks.