East Asian economies drive global trade recovery: UNCTAD

Geneva [Switzerland], Feb 10 (ANI): Led by trade in goods, global trade recovered in the last quarter of 2020, reducing its overall decline for the year to about 9 per cent, according to UNCTAD’s new Global Trade Update published on Wednesday.

But while imports and exports of goods grew by about 8 per cent in the fourth quarter of last year, trade in services stagnated as measures taken in the global fight against Covid-19 continued to affect sectors such as travel.

“The recovery process has been uneven with many countries lagging,” said UNCTAD economist Alessandro Nicita who worked on the report.

The recovery of Q4 2020 was largely driven by the trade of goods from and to developing countries, especially by the very strong performance of East Asian economies.

On a year-over-year basis, trade in goods originating from East Asia grew about 12 per cent in Q4 2020 with goods imports increasing by about 5 per cent, said the report.

In contrast, negative trends remained for goods exports originating from most other regions, even in Q4 2020.

The influence of East Asian economies is even more marked when considering trade among developing countries (South-South trade).

While South-South trade has outperformed global trade, excluding trade of East Asian developing economies results in a significant drop in South-South trade, even for Q4 2020.

“The recovery in Q4 2020 was more broad-based, as trade in most sectors recorded positive growth,” said Nicita.

In Q3 2020, the recovery was by contrast largely driven by sectors related to goods for which demand increased due to Covid-19 like personal protective equipment and home office equipment.

However, besides services, trade in the energy and transport equipment sectors continued to be well below average levels.

The report highlighted persisting concerns about Covid-19, noting that uncertainty about the timing and magnitude of stimulus packages will result in a lower trade rebound in the coming months.

It projects that the first quarter of 2021 will record a slowdown in the recovery of trade in goods (a 1.5 per cent drop relative to Q4 2020) and a further decline for trade in services (a 7 per cent drop relative to Q4 2020), largely because of continued disruptions in the travel sector.

The report also finds that Covid-19 has affected countries’ competitiveness in global markets with some economies gaining market share in certain sectors while losing it in others.

“The fall in global demand brought by Covid-19 has forced least competitive suppliers out of global markets while enabling the most competitive suppliers to thrive during the recovery process,” the report says.

Countries like China, Switzerland, Taiwan, Turkey, Uganda and Vietnam experienced relatively better export performance in 2020, according to the report.

In contrast, Colombia, Nigeria, Saudi Arabia and Venezuela performed relatively worse last year.

The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent inter-governmental body.

(ANI)