WTO: strong recovery in trade may be short-lived

Feb, 18, 2021 Posted by Ruth Hollard

Week 202107

On Thursday, February 18, the World Trade Organization (WTO) released a new edition of the “Goods Trade Barometer”, which provides real-time information on the trajectory of world trade including statistics and projections on the entity itself and other organizations.

The current edition points to a strong recovery in exports and imports but warns of the risk that this positive picture may be of short duration due to the growing number of cases of covid-19 and new variants of the virus.

Through the mechanism, a score above 100 means growth above the medium-term trend, and a score below 100 shows a trend of contraction in exports and imports. The current Barometer reached 103.9 points, thus indicating the improvement in exports and imports in the fourth quarter of 2020 after declines caused by the Covid-19 damage.

In the third quarter of 2020, the volume of goods had already started to grow, with strong exports from Asia to North America and Europe. But trade between July and September fell 5.6% compared to the same period in 2019.

In the fourth quarter of 2020, trade volume continued to be more dynamic. But the outlook for the first quarter of 2021 “is highly uncertain” because of Covid-19.

Brazilian Imports and Exports | Jan 2019 to Dec 2020 | TEU

Source: DataLiner

“The outlook for trade in goods will depend to a large extent on the evolution of the virus and the spread of effective vaccines,” says the WTO. All components of the Barometer are above the trend or following the trend, but orders for exports and automotive products show signs of slowing down.

The indicators for containers and international cargo transport are increasing faster than the average growth of other items observed by the WTO.

Electronic components and raw materials are above trend and expanding, respectively, possibly due to the formation of inventories, according to the WTO.

“Overall, this suggests that the upward momentum in trade may have peaked,” concludes the WTO, which is normally cautious in its assessments. Other international organizations have improved their projections for the international economy. But they also warned of the risks of slippage if vaccination against Covid-19 does not progress and confinements are maintained in several markets.

Number of container ship daily calls, January 1, 2020 – January 27, 2021

Source: Cerdeiro, Komaromi, Liu, and Saeed (2020). Available in UN Comtrade Monitor.
Note: Based on the Automatic Identification System (AIS) developed by the United Nations International Maritime Organization (IMO).

The graph above shows the number of daily container port calls since the beginning of 2020 registered by the Automatic Identification System (AIS) developed by the International Maritime Organization. Port calls in January fell about 7% compared to December and 6% compared to the July to September average of last year. This suggests that the second wave of COVID-19 will have an appreciable impact on goods shipments by sea, which is not yet fully reflected in the Merchandise Barometer.

Sources: Economic Value and WTO

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