Global trade likely to fall by 7% to 9% in 2020: UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) has said that the value of global trade is set to fall by 7 per cent to 9 per cent in 2020 from the previous year.

UNCTAD has said, "Depending on how the COVID-19 evolves n the winter months, the UN trade and development body expects the value of global trade to contract by 7 per cent to 9 per cent with respect to 2019."

UNCTAD estimates show that there will be a 5 per cent drop on in the world trade in the third quarter of 2020 compared to 2019, an improvement from the 19 per cent decline in the second quarter but insufficient to pull trade out of the red. Global trade recorded a 5 per cent drop in the third quarter of 2020 compared with the same period last year, according to UNCTAD's new Global Trade Update published on October 21, 2020.

This marks an improvement on the 19 per cent year-on-year (YoY) plunge recorded in the second quarter, and UNCTAD expects the frail recovery to continue in the fourth quarter, with a preliminary forecast of -3per cent compared with the last quarter of 2019.

"The uncertain course of the pandemic will continue aggravating trade prospects in the coming months," UNCTAD Secretary-General Mukhisa Kituyi said. "Despite some 'green shoots' we can't rule out a slowdown in production in certain regions or sudden increases in restrictive policies."

Although a 7 per cent to 9 per cent decrease would be a negative finish for the year, Dr Kituyi highlighted that it's a much more positive result than was expected in June, when UNCTAD had projected a 20 per cent year-on-year drop for 2020.

The report added that if the pandemic resurges in coming months that could lead to a deteriorating environment for policy-makers and a sudden increase in trade-restrictive policies.

Meanwhile, 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 per cent.