The growth of global trade in goods remains strong in the fourth quarter of 2020 and has rebounded from the deep decline in the third quarter, according to the latest Goods Trade Barometer released by the World Trade Organization (WTO). But prospects for 2021 and beyond are uncertain as new variants of COVID-19 have appeared.

 

“The barometer’s current reading of 103.9 is above both the baseline value of 100 for the index and the previous reading of 100.7 from last November, signalling a marked improvement in merchandise trade since it dropped sharply in the first half of last year”, the report pointed out.

 

While all component indices are either above trend or on-trend. Furthermore, the indicator may not fully reflect the resurgence of COVID-19 and the appearance of new variants of the disease, which will undoubtedly weigh on goods trade in the first quarter of 2021,” the report added.

 

As the two most reliable wind direction indicators of global trade, the export order index (103.4) and the auto product index (99.8) have both peaked recently. In contrast, the container shipping index (107.3) and air transportation index (99.4) are still rising. Both the electronic component index (105.1) and the raw material index (106.9) are steadily above trend and rising, possibly due to inventory stockpiling.

 

Strong growth in exports from Asia to North America and Europe had revived world merchandise trade in the third quarter of 2020 from a sharp decline in the second quarter, although trade in the period was still down 5.6 percent compared to the third quarter of 2019. While still very large, these declines are less severe than many analysts feared at the start of the pandemic, the report said, adding that the actual decrease in world trade volume in 2020 may be less severe than 9.2 percent predicted earlier.

 

The outlook for merchandise trade will depend to a large extent on the evolution of the virus and the dissemination of effective vaccines. “Overall, this suggests that trade’s upward momentum may have peaked,” it observed.