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9.2% fall in retail trade in 2020, 7.2% rise in 2021: WTO

Oct '20
Chart 1 - World merchandise trade volume, 2000‑2021. Pic: World Bank
Chart 1 - World merchandise trade volume, 2000‑2021. Pic: World Bank
The World Trade Organisation (WTO) recently forecast a 9.2 per cent decline in the volume of world merchandise trade for 2020, followed by a 7.2 per cent rise in 2021. The projected decline is less than the 12.9 per cent drop foreseen in the April forecast. These are subject to an unusually high degree of uncertainty as they depend on the evolution of the pandemic and government responses, WTO said.

Strong trade performance in June and July have brought some signs of optimism for overall trade growth in 2020. Trade growth in COVID-19 related products was particularly strong in these months, showing trade's ability to help governments obtain needed supplies.

Conversely, the forecast for next year is more pessimistic than the previous estimate of 21.3 per cent growth, leaving merchandise trade well below its pre-pandemic trend in 2021.

The 14.3 per cent quarter-on-quarter decline in world merchandise trade in the second quarter is the largest on record, but high-frequency data point to a partial rebound in the third quarter, WTO said.

Global merchandise trade recorded its sharpest ever one-period decline in the second quarter, falling by 14.3 per cent compared to the previous period, but the impact differed strongly across regions. The steepest declines were in Europe and North America, where exports fell 24.5 per cent and 21.8 per cent respectively.

By comparison, Asian exports were relatively unaffected, dropping just 6.1 per cent. During the same period imports were down by 14.5 per cent in North America and by 19.3 per cent in Europe but just by 7.1 per cent in Asia.

The performance of trade for the year to date exceeded expectations due to a surge in June and July as lockdowns were eased and economic activity accelerated. The pace of expansion could slow sharply once pent up demand is exhausted and business inventories have been replenished. More negative outcomes are possible if there is a resurgence of COVID-19 in the fourth quarter, WTO said in a note.

The trade decline in Asia of 4.5 per cent for exports and 4.4 per cent for imports in 2020 will be smaller than in other regions.

In contrast to trade, gross domestic product (GDP) fell more than expected in the first half of 2020, causing forecasts for the year to be downgraded. Consensus estimates now put the decline in world market-weighted GDP in 2020 at 4.8 per cent compared to 2.5 per cent under the more optimistic scenario outlined in April.

GDP growth is expected to pick up to 4.9 per cent in 2021, WTO said. Imports into Asia and South America are both expected to grow by 6.2 per cent and 6.5 per cent respectively next year, but Asia’s rise would follow on a modest 4.4 per cent decline this year while South America’s would be on top of a steep 13.5 per cent plunge in 2020.

In this case Asia’s imports would have substantially recovered while South America’s trade would still be deeply depressed, WTO added.

Fibre2Fashion News Desk (DS)

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