As the second and third coronavirus waves make a resurgence across Europe and the US, the prospects of a smooth recovery for global trade are becoming weaker. According to a report released by the UN Conference on Trade and Development (UNCTAD), the coronavirus pandemic is expected to reduce global trade volume anywhere between 7% and 9% in 2020.
In the third quarter international trade improved across several sectors, as some countries lifted their coronavirus restrictions in order to suppress further damage to their economies. The UNCTAD data found that office equipment sales saw the largest volume increases, followed by communication equipment and textiles. However, trade in the energy sector still remains 35% below last year’s levels, followed by the automotive sector, which fell by 18% between July and August.
Much of the recent global trade recovery was fueled by the significant growth of Chinese exports, as outboard shipments increased by 10% in the third quarter. The UNCTAD noted that China’s exports between January and September remained relatively stable and on par with 2019 levels during the same period.
According to the UNCTAD, overall global trade remained subdued by 4.5% from July to September compared to the same period a year prior. Although the outlook certainly provides a glimmer of hope compared to the 19% plunge recorded in the second quarter, the trade body warns that the continued rise in coronavirus cases around the world will likely lead to an increase in trade-restrictive policies and an increase in uncertainty. Nonetheless, the final quarter of 2020 is expected to see global trade only 3% below 2019 levels on a year-over-year basis.
Information for this briefing was found via the UNCTAD. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.