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Recovery Stalled: Global Trade Slows Again

Global Economy
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EDITOR NOTE: Global trade shrunk in the first half of 2020 due to the pandemic and the ensuing lockdown. In the second half of the year, we saw a recovery as exports in goods ticked up, led mostly by East Asian countries. Service exports weren’t so hot, but China fared better as its pandemic recovery outpaced all other developed countries. Due to yet another lockdown in the fourth quarter, analysts are expecting global trade to shrink once again in the first quarter of 2021, according to the UN Conference on Trade and Development (UNCTAD). Fortunately, the expected decline may not be as bad as the first half of last year. Global trade supports millions of jobs in the US, as around 234 countries import our services, foreign companies employ American workers, and imports at competitive costs provide American consumers with a wide range of product choices. A decline in global trade disrupts all of the above. And although we are seeing modest recovery, all is uncertain, as Covid spread amid new strains of the virus may outpace the rate of vaccination, potentially triggering another lockdown and continued disruption of imports and exports. 

A recovery in global trade is expected to slow again in the first quarter of 2021 as the coronavirus pandemic keeps disrupting the travel industry after world trade contracted 9% in 2020, a U.N. report said on Wednesday.

After lockdowns caused trade to shrink 15% in the first half of 2020, it rebounded in the second half, with global trade in goods up about 8% in the fourth quarter compared with the third, the U.N. Conference on Trade and Development (UNCTAD) said.

That was largely due to developing countries, particularly those in East Asia, with trade in goods originating from the region up 12% in the fourth quarter year-on-year.

“East Asian economies have been leading the recovery process with strong export growth and gains in global market share,” UNCTAD said, adding that most manufacturing sectors rebounded in the fourth quarter, apart from energy and transport.

However, trade in services stagnated at levels seen in the third quarter, the report said, adding that exports of services from China, and to a lesser degree India, had fared relatively better than other countries.

For the first quarter of 2021, UNCTA projects a 1.5% fall in trade in goods versus the previous quarter, and a 7% drop in trade in services, although it said its forecasts were uncertain due to the pandemic and uncertainty about stimulus packages.

Originally posted on Reuters

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