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World trade volume rallies in Q3 post COVID-19 shock

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World Trade Organization. Photo: TWITTER/WTO

Global merchandise trade volumes bounced back in the third quarter (Q3) of 2020 from a deep Q2 slump brought on by the COVID-19 crisis according to statistics released by the World Trade Organisation (WTO).

According to the WTO, the Q3 rally helped limit the contraction in world trade since the start of the year, as the volume of merchandise trade rose 11.6per cent compared with the previous quarter after falling 12.7per cent in the Q2 (revised up from an initially estimated decline of 14.3per cent).

Despite the rebound, the volume of trade between July and September was still 5.6per cent lower than in the same period last year. The Q3 statistics for trade volumes flow from the data for trade values, which showed a partial recovery according to a previous release.

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The volume of world merchandise trade for the first three quarters of 2020 is currently down 8.2% compared with the same period in 2019.The drop is smaller than the projected decline of 9.2per cent for the whole of 2020 in the WTO’s most recent trade forecast, but growth for the whole year largely depends on whether the recent resurgence of COVID‑19 takes a toll on trade in the fourth quarter.

More industrialised regions saw stronger recoveries in their merchandise exports, whereas the pace of expansion was more muted in regions that export natural resources disproportionately.

Double-digit export growth compared with the previous quarter was recorded in North America (20.1%), Europe (19.3%), and Asia (10.1%, from a higher base due to a smaller decline in the second quarter), while weaker growth was seen in South and Central America (3.1%), and “other regions” (3.3%).

However, in year-on-year terms, exports in the third quarter were still down in North America (‑9.0%), Europe (-5.4%), South and Central America (-3.4%) and other regions (‑11.4%). The only exception was Asia (+0.4%), where regional exports slightly surpassed their level in the same period a year ago.

Merchandise import volumes grew fastest in North America (16.6% compared with the previous quarter), and Europe (15.0%) in the Q3 after having fallen sharply in the Q2. In contrast to its stronger performance on the export side, Asia’s merchandise imports registered a modest 2.1% rise in the Q3, suggesting a widening of trade surpluses in the region.

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South and Central America recorded an additional 0.7% decline in the Q3 compared with the previous quarter while imports of other regions collectively increased by 3.2%. Merchandise import volumes were down during the review period compared with the same period in the previous year in all regions, including North America (‑4.7%), South and Central America (-19.4%), Europe (-6.4%), Asia (-4.7%) and other regions (‑14.7%).

The pick-up in merchandise trade volume growth in the Q3 coincided with the relaxation of lockdown measures in Europe and North America, as their health situations improved in the summer months.

Recovery was also supported by extensive fiscal and monetary policy interventions in major economies, as well as by adaptation in key sectors (notably online retail businesses and service providers in the United States and Europe) as businesses and households embraced technological solutions to facilitate working and shopping from home. In contrast, trade remained weak in South and Central America and other regions due to surges of COVID-19 and a lack of fiscal and monetary policy capacity.

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