Global trade decline narrows in 2020 to 9% after recovery in Q4, Unctad says

Global trade recovered in the fourth quarter of 2020, reducing its overall decline for the full year to 9 per cent, but the rebound may slow down in the first quarter of 2021 due to pandemic disruptions, a United Nations report said.

East Asian economies led the recovery in trade with strong export growth and gains in global market share but the global recovery remained uneven in 2020, the United Nations Conference on Trade and Development (Unctad) said on Wednesday.

In terms of industries, most manufacturing sectors recorded positive trade growth in the fourth quarter, the UN agency said. The main exceptions were the energy and transportation sectors.

"The economic and social disruptions brought about by Covid-19 greatly affected global trade during 2020," Unctad said in its February Global Trade Update. "The effect of Covid-19 on global trade was most severe during the first half of 2020 ... global trade began to recover in Q3 2020 and more strongly in Q4 2020."

The Covid-19 global health crisis resulted in lockdowns across most of the world’s major economies, paralysed international travel, hit manufacturing bases and disrupted supply chains – plunging the global economy into a deep recession.

Global trade shrank 15 per cent in the first half of 2020 following movement restrictions to curb the spread of the virus.

It rebounded in the second half of the year, driven by an 8 per cent rise in the global trade of goods during the fourth quarter compared with the third quarter.

The recovery in the fourth quarter is mainly due to developing countries, particularly East Asian economies, Unctad said. Trade in goods originating from the East Asian region grew about 12 per cent annually in the fourth quarter.

However, the global trade in services continued to lag behind, stagnating in the fourth quarter at the same levels seen in the third quarter.

The exceptions are exports of services from China, and to a lesser extent India, which appear to have "fared relatively better" than other major economies throughout 2020, the agency said.

Trade in most sectors recorded growth in the fourth quarter, with textiles (including PPE), home office equipment, and agri-food among those doing well during the pandemic.

Looking ahead, the recovery in trade is expected to slow down in the first quarter of 2021 mainly due to continued disruptions in the travel sector, the Unctad said.

The agency projected a 1.5 per cent drop in the trade of goods during the first quarter of 2021, compared to previous quarter, and a 7 per cent drop in trade of services.

"Projections remain imprecise due to persisting concerns about Covid-19 and uncertainty about the magnitude and timing of stimulus packages in some major economies," the UN agency said.