UNCTAD estimates show a 5 per cent drop in world trade in the third quarter of 2020 compared to 2019, an improvement from the 19 per cent decline in the second quarter but insufficient to pull trade out of the red.
Global trade recorded a 5 per cent drop in the third quarter of 2020 compared with the same period last year, according UNCTAD’s new Global Trade Update published today. “This marks an improvement on the 19 per cent year-on-year plunge recorded in the second quarter, and UNCTAD expects the frail recovery to continue in the fourth quarter, with a preliminary forecast of -3 per cent compared with the last quarter of 2019.”
Depending on how the Covid-19 pandemic evolves in the winter months, the UN trade and development body expects the value of global trade to contract by 7 per cent to 9 per cent with respect to 2019. “The uncertain course of the pandemic will continue aggravating trade prospects in the coming months,” UNCTAD secretary-general Mukhisa Kituyi said, adding that despite some 'green shoots', it can't be ruled out a slowdown in production in certain regions or sudden increases in restrictive policies, according to the UN trade and development body.
Although a 7 per cent to 9 per cent decrease would be a negative finish for the year, Dr Kituyi highlighted that it’s a much more positive result than was expected in June, when UNCTAD had projected a 20 per cent year-on-year drop for 2020. Since then, trade trends have improved primarily thanks in to the earlier than expected resumption of economic activities in Europe and East Asia.
China has in particular restarted its economy much earlier than initially expected, and the report highlights the country’s notable trade recovery. Chinese exports, after falling in the early months of the pandemic, stabilised in the second quarter of 2020 and rebounded strongly in the third quarter, with year-over-year growth rates of almost 10 per cent.
“Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period,” the report reads, adding that Chinese demand for goods and services has recovered from the decline in the second quarter. “Contrary to other major economies, its imports stabilized in July and August and then grew by a substantial 13 per cent in September.”
Export growth in September was also recorded in India (4 per cent) and South Korea (8 per cent), the report reads.
Likewise, the sharp and widespread decline in international trade in second quarter of 2020 was similar for developing and developed countries. But exports from developing economies appear to be recovering faster. Year-on-year growth of developing nations’ exports improved from -17 per cent in the second quarter to -6 per cent in July, while those from developed nations increased from -22 per cent to -14 per cent. And South-South trade – commerce among developing countries – has shown some resilience, with the year-on-year decline sitting at 8% in July, up from 16 per cent in the second quarter.
The report’s assessment of trade in different sectors reveals that the pandemic has hit the energy and automotive industries the hardest, while mitigation responses including teleworking and personal protection measures have led to strong growth in sectors such as communication equipment, office machinery, and textiles and apparel. But UNCTAD’s analysis gives special attention to Covid-19 medical supplies, which include personal protective equipment, disinfectants, diagnostic kits, oxygen respirators and other related hospital equipment.
According to the report, exports of Covid-19 medical supplies from China, the European Union (EU) and the United States (US) rose from about $25 billion to $45 billion per month between January and May 2020. And since April, trade in such products has increased by an average of more than 50 per cent. “The increase in such trade, however, has primarily benefited wealthier nations, with middle- and low-income countries largely priced out from access to Covid-19 supplies,” the report says.
Since the outset of the pandemic, each resident of high-income countries has benefited on average from an additional $10 per month of imports of Covid-19 related products, compared with just $1 for people living in middle-income countries and a mere $0.10 for those in low-income countries. This means that per capita imports of medical goods essential to mitigate the pandemic have been about 100 times higher for wealthy countries than for poor nations.
“While it should be expected that the increase of per capita imports of Covid-19 products would be larger for wealthier countries, the sheer difference is staggering,” the report reads, warning that if a Covid-19 vaccine becomes available, the access divide between residents in wealthy and poor countries could be even more drastic.
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