World trade in goods rebounds in Q3 , but pandemic shadow looms

Our Bureau New Delhi | Updated on November 20, 2020

But growth is likely to slow in Q4 once the pent-up demand is exhausted and inventory restocking is completed   -  REUTERS

WTO’s Goods Trade Barometer expands after plunging in Q2

World trade in goods bounced back in the third quarter of calendar 2020 with a surge in export orders, after dropping 17.2 per cent (year-on-year) in the second quarter though certain components indicate that the resurgence of Covid-19 may hit performance again, according to the latest reading of the Goods Trade Barometer released by the World Trade Organization (WTO) on Friday.

Pent-up demand

“The latest reading indicates a strong rebound in trade in the third quarter as lockdowns were eased, but growth is likely to slow in the fourth quarter as pent-up demand is exhausted and inventory restocking is completed,” said the latest report of the quarterly Goods Trade Barometer released by the WTO.

But it added that the second wave of Covid infections happening in Europe and North America may lead to more lockdowns, closure of businesses and financial distress. The Goods Trade Barometer rose to 100.7 points in the third quarter, from 84.5 recorded in August. A reading greater than 100 suggests above-trend growth. The reading in August reflected collapsing trade and output in the second quarter as lockdowns and travel restrictions were resorted to in the fight against the virus.

The latest reading is consistent with the WTO’s revised trade forecast of October 6, which predicted a 9.2 per cent decline in the volume of world merchandise trade in 2020, the report said. This outcome would require a sharp rebound in the third quarter following the 17.2 per cent year-on-year decline registered in the second quarter, it added.

The report pointed out that while normally the Goods Trade Barometer anticipated turning points in world trade by a few months, new sources of uncertainty related to the pandemic may have reduced the predictive value of its component indices.

The indicators point to a stalled recovery of international flights and container shipping in October, but improved economic sentiment as reflected by copper futures and press reports, it added.

Published on November 20, 2020

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