The World Trade Organization (WTO) and the International Monetary Fund (IMF) have released new statistics on trade and the global economy. While the WTO finds that trade in services is still not recovering from the pandemic-induced decline, trade in goods has seen a stronger rebound, and the IMF expects that political support and the arrival of COVID-19 vaccines will lift economic activity.
Un Press release of the WTO entitled “The recovery of services trade is not yet in sight” highlights that global trade in services in the third quarter (Q3) of 2020 fell by 24% compared to Q3 of 2019. The year-on-year decline is smaller than that from the second quarter of 2019 to the second quarter of 2020, which was 30%. The third quarter figures for trade in goods, by contrast, show only a 5% decline compared to the third quarter of 2019.
The WTO notes that unlike goods that can be stored and sold later, cancellations of services (e.g. flights not taken) are largely lost opportunities. Within the category of trade in services, tourism travel is the most affected sector, down 68% globally compared to the third quarter of 2019. For the same time period, transport is down 24% and “other” services, including construction, recreational, legal and financial services, are down 2%.
For merchandise trade, early figures from 72 countries representing 92% of global trade reflect a faster recovery. While quarterly year-on-year figures remain depressed, WTO statistics show increases in October and November 2020, with growth of 3% and 6% respectively, compared to the same months in 2019. However, the statement warns that these figures may reflect deferred purchases that were delayed as a result of the pandemic. Furthermore, global statistics may mask regional variations, as Asia and Europe recorded significant increases in exports, while those in the Americas remain low.
Meanwhile, update of the “IMF World Economic Outlook (WEO), January 2021, also concludes that "Services trade is expected to recover more slowly than merchandise volumes“partly due to subdued cross-border tourism and business travel,” until global COVID-19 transmission is brought under control. However, the IMF expects global trade volumes (including goods and services) to recover, projecting 8% year-over-year growth in 2021.
IMF statistics estimate that the world economy will grow by 5,5% in 2021 (up 0,3% from the previous forecast) and 4,2% in 2022. However, the update of the projections presented in the “World Economic Outlook” notes that the economic recovery is likely to be uneven both across and within countries, as it will vary depending on their access to medical interventions, the effectiveness of policy support and cross-border spillovers, in addition to the structural characteristics of the pandemic. These assumptions take into account the possibility of additional lockdowns to contain new variants of the virus before a vaccine is widely available. But it also assumes broad availability of vaccines in advanced economies by the summer of 2021 and in the rest of countries by the second half of 2022.
As described in the October 2020 WEO, The January 2021 update emphasizes the importance of policy actions to ensure participatory growth that benefits all and accelerates the transition to sustainable development.It also underlines the need for strong multilateral cooperation to curb the pandemic and stimulate growth.
Efforts include the initiative to provide timely universal access to vaccines, as well as working with countries on liquidity and debt issues.
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