World trade rebounds slowly in Sept quarter, outlook uncertain

New Delhi: The United Nations Conference on Trade and Development (UNCTAD) expects a 7-9% on-year drop in the value of global trade in 2020 despite signs of a rebound led by China, due to a possible resurgence of Covid-19 infections in the coming months and the prospect of a deteriorating policy environment, with sudden increases in trade restrictive policies. In its quarterly Global Trade Update, it said that preliminary data for the third quarter suggest that global growth remained negative with a decline of about 4.5% on a year-over-year basis though it rebounded from the second quarter when it shrank around 19% on year.
“Trade in home office equipment and medical supplies has increased in Q3, while it further weakened in the automotive and energy sectors,” UNCTAD said, adding that there is a generalized downtrend in the quarter except for some East Asian economies. As per the report, India’s exports declined 6.1% on-year in the third quarter of 2020. Third quarter refers to the quarter ended September 30, 2020. Earlier this month, the World Trade Organization (WTO) upgraded its forecast for trade in goods due to improvements from June and predicted a 9.2% drop in 2020 but it saw a more muted rebound in 2021 with further lockdowns from a second wave of Covid-19 infections posing risks.

“No region has been spared from the decline in international trade in the second quarter,” UNCTAD said. While trade in East Asia appears to have fared relatively better than in other regions, the sharpest decline has been for the West and South Asia region, where imports have dropped by 35% and exports by 41%. China’s exports rebounded strongly in the third quarter after falling in the early months of the pandemic, and have posted year-on-year growth rates of nearly 10%, UNCTAD said.

Medical supplies trade
As per the report, trade in COVID-19 medical supplies has grown by an average of more than 50% since April 2020, but the increase in such trade has primarily benefited residents of wealthier nations. “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,” it said.

UNCTAD highlighted that the difference in access to a potential COVID-19 vaccine for residents in wealthy and poor countries could be even more drastic than for medical supplies. While some low-income countries have the capacity to locally manufacture some protective equipment, this may not be the case for vaccines, which require stronger manufacturing and logistics capacities. Overall, per capita imports of medical goods essential to mitigate the pandemic have been about 100 times higher for high-income countries than for low income nations.