UNCTAD sees slowdown in recovery of global trade in Q1 2021

By Almot Maqolo

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Global trade projections for Q1 2021 indicate a slowdown in the recovery of trade in goods and a further decline for trade in services largely to continued disruptions in the travel sector, the United Nations Conference on Trade and Development (UNCTAD) said.

The economic and social disruptions brought about by Covid-19 greatly affected global trade during 2020.
“However, projections remain imprecise due to persisting concerns about Covid-19 and uncertainty about the magnitude and timing of stimulus packages in some major economies,” UNCTAD stated.

Overall, world trade recorded a drop in value of about 9% in 2020, with trade in goods declining by about 6% and trade in services decreasing by about 16.5%.

The effect of Covid-19 on global trade was most severe during the first half of 2020 with a drop in value of about 15%, according to UNCTAD. Global trade began to recover in Q3 2020 and more strongly in Q4 2020.

It said the recovery in the second half of 2020 was largely due to the rebound of trade in goods.
“Trade in services continues to lag substantially below averages.”

In Q4 2020 global trade in goods grew by about 8% on a quarter-over-quarter basis while trade in services stagnated at Q3 2020 levels.

UNCTAD noted that the trade recovery of Q4 2020 is attributed to developing countries.
“The trade of goods from and to developing countries has recovered more strongly relative to developed countries, especially in relation to exports,” it said.

However, the positive trade growth of developing countries in Q4 2020 vanishes once East Asian economies are excluded. The importance of East Asian economies in explaining the recovery in the trade of developing countries is even more marked when considering trade among developing countries (South-South trade).

“While South-South trade has outperformed global trade, excluding trade of East Asian developing economies results in South-South trade to significantly drop, even for Q4 2020.”

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