A WTO release highlights that global services trade for the third quarter of 2020 is down 24% relative to Q3 2019 while third quarter numbers in goods trade show a 5% decline compared to Q3 2019.
Global statistics can mask regional variations as Asia and Europe saw exports increase significantly, whereas exports remain down in the Americas.
The IMF projects the global economy to grow 5.5% in 2021 and 4.2% in 2022, but notes that economic recovery is likely to be uneven both across and within countries.
The World Trade Organization (WTO) and International Monetary Fund (IMF) have both released new statistics on trade and the global economy. While the WTO finds that services trade is not yet rebounding from the pandemic-induced decline, goods trade has experienced a stronger rebound, and the IMF expects policy support and the arrival of COVID-19 vaccines to lift economic activity.
A WTO news release titled, ‘Services Trade Recovery Not Yet in Sight,’ highlights that global services trade for the third quarter (Q3) of 2020 is down 24% relative to Q3 2019. While the year-on-year decline is smaller than the 30% decline from the second quarter of 2019 to the second quarter of 2020, third quarter numbers in goods trade, for contrast, show just a 5% decline compared to Q3 2019.
WTO flags that unlike goods, which can be stockpiled and sold at a later time, services cancellations (e.g. flights not taken) are largely foregone opportunities. Within the broader services trade category, travel is the most affected sector, down 68% globally compared to Q3 2019. For the same time period, transport is down 24%, and “other” services, including construction, recreational, legal, and financial services, are down 2%.
For goods trade, early figures from 72 countries that account for 92% of global merchandise trade suggest a more rapid recovery. While quarterly year-on-year figures remain depressed, WTO statistics show increases in October and November 2020, with 3% and 6% growth respectively, compared to those months in 2019. However, the release cautions that these figures can be reflective of deferred purchases that were delayed as a result of the pandemic. Likewise, the global statistics can mask regional variations, as Asia and Europe saw exports increase significantly, whereas exports remain down in the Americas.
The IMF’s January 2021 World Economic Outlook (WEO) Update also finds that “services trade is expected to recover more slowly than merchandise volumes,” in part due to “subdued cross-border tourism and business travel,” until COVID-19 transmission is controlled at a global scale. However, the IMF expects global trade volumes (inclusive of both goods and services) to recover, projecting 8% year-on-year growth in 2021.
IMF statistics project the global economy to grow 5.5% in 2021 – up 0.3% since the previous forecast, on which SDG Knowledge Hub coverage is available here – and 4.2% in 2022. The WEO Update notes, however, that economic recovery is likely to be uneven both across and within countries, as it will vary based on their access to medical interventions, effectiveness of policy support, and cross-border spillover effects, in addition to structural characteristics going into the pandemic. Baseline assumptions take into account the possibility of additional lockdowns to contain new virus variants before a vaccine becomes widely available, though also assumes broad vaccine availability in advanced economies by summer 2021, and across most countries by the second half of 2022.
As also described in the October 2020 WEO Update, the January 2021 Update emphasizes the importance of policy actions to ensure participatory growth that benefits all and accelerate the transition to lower carbon dependence. The January 2021 Update also underscores the need for strong multilateral cooperation to rein in the pandemic and stimulate growth. Efforts include the COVAX initiative to provide timely universal access to vaccines, as well as working with countries on liquidity and debt issues.
At a press briefing held on 28 January, Gita Gopinath, Economic Counselor and Director, Research Department, IMF, noted that the projections remain subject to uncertainty, and emphasized that the new virus strains have made it “abundantly clear that the pandemic is not over until it’s over everywhere.” [WTO News Release] [Publication: IMF World Economic Outlook Update, January 2021] [WEO Update January 2021 Landing Page] [IMF Press Briefing]