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Aided by strong Q4 recovery, decline in 2020 global trade less severe than earlier forecast: WTO

Amiti Sen New Delhi | Updated on February 19, 2021

Outlook for 2021 to depend upon evolution of virus, dissemination of vaccines, points out Goods Trade Barometer

The decline in the volume of world trade in goods in 2020 may be “slightly less severe” than the WTO’s recent forecast of 9.2 per cent due to strong performance of trade in the fourth quarter, according to the latest Goods Trade Barometer brought out by the multilateral body. But prospects for 2021 and beyond are uncertain as new variants of Covid-19 have appeared.

“The outlook for merchandise trade will depend to a large extent on the evolution of the virus and the dissemination of effective vaccines,” pointed out the report of the quarterly Goods Trade Barometer released by the WTO on Thursday.

World trade in goods remained strong in the fourth quarter of 2020 maintaining the third quarter’s recovery. “The barometer’s current reading of 103.9 is above both the baseline value of 100 for the index and the previous reading of 100.7 from last November, signalling a marked improvement in merchandise trade since it dropped sharply in the first half of last year”, the report pointed out.

While all component indices are either above trend or on-trend, some, like export orders and auto products, already show signs of deceleration while others could turn down in the near future, it said.

“Furthermore, the indicator may not fully reflect the resurgence of Covid-19 and the appearance of new variants of the disease, which will undoubtedly weigh on goods trade in the first quarter of 2021,” the report added.

The Goods Trade Barometer provides real-time information on the trajectory of world merchandise trade relative to recent trends.

Strong growth in exports from Asia to North America and Europe had revived world merchandise trade in the third quarter of 2020 from a sharp decline in the second quarter, although trade in the period was still down 5.6 per cent compared to the third quarter of 2019. While still very large, these declines are less severe than many analysts feared at the start of the pandemic, the report said, adding that the actual decrease in world trade volume in 2020 may be less severe than 9.2 per cent predicted earlier.

The container shipping and air freight indices are both rising, suggesting faster than average growth, although recent high-frequency data show that container shipping has dipped in the new year. The report said that indices for electronic components and raw materials are above trend and rising, possibly due to inventory stockpiling. “Overall, this suggests that trade’s upward momentum may have peaked,” it observed.

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Published on February 19, 2021
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