WORLD – Global trade recorded a 5% drop in the third quarter of 2020 compared to the same period last year, according UNCTAD’s new Global Trade Update.
According to UNCTAD estimates, the 5% drop in world trade in the third quarter of 2020 is an improvement from the 19% decline in the second quarter but insufficient to pull trade out of the red.
This marks an improvement on the 19% 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% compared with the last quarter of 2019.
Depending on how the COVID-19 pandemic evolves in the coming months, the UN trade and development body expects the value of global trade to contract by 7% to 9% 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.
“Despite some ‘green shoots’ we can’t rule out a slowdown in production in certain regions or sudden increases in restrictive policies”
Dr. Mukhisa Kituyi, UNCTAD Secretary General
Although a 7% to 9% 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% year-on-year drop for 2020.
Since then, trade trends have improved primarily thanks to the earlier than expected resumption of economic activities in Europe and East Asia.
According to the report, the sharp and widespread decline in international trade in Q2 2020 was similar for developing and developed countries but exports from developing economies appear to be recovering faster.
The year-on-year growth of developing nations’ exports improved from -17% in the second quarter to -6% in July while those from developed nations increased from -22% to -14%.
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% in the second quarter.
According to the report, exports of COVID-19 medical supplies which include personal protective equipment, disinfectants, diagnostic kits, oxygen respirators from China, the European Union and the United States rose from about $25 billion to $45 billion per month between January and May 2020.
Since April, trade in such products has increased by an average of more than 50%.
The increase in COVID-19 medical supplies has however, 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.
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