WTO’s Goods Trade Barometer expands after plunging in Q2
World trade in goods bounced back in the third quarter of calendar 2020
with a surge in export orders, after dropping 17.2 per cent (year-on-year) in
the second quarter though certain components indicate that the resurgence
of Covid-19 may hit performance again, according to the latest reading of
the Goods Trade Barometer released by the World Trade Organization
(WTO) on Friday.
Pent-up demand
“The latest reading indicates a strong rebound in trade in the third quarter
as lockdowns were eased, but growth is likely to slow in the fourth quarter
as pent-up demand is exhausted and inventory restocking is completed,”
said the latest report of the quarterly Goods Trade Barometer released by
the WTO.
But it added that the second wave of Covid infections happening in Europe
and North America may lead to more lockdowns, closure of businesses and
financial distress. The Goods Trade Barometer rose to 100.7 points in the
third quarter, from 84.5 recorded in August.
A reading greater than 100 suggests above-trend growth. The reading in
August reflected collapsing trade and output in the second quarter as
lockdowns and travel restrictions were resorted to in the fight against the
virus.
The latest reading is consistent with the WTO’s revised trade forecast of
October 6, which predicted a 9.2 per cent decline in the volume of world
merchandise trade in 2020, the report said.
This outcome would require a sharp rebound in the third quarter following
the 17.2 per cent year-on-year decline registered in the second quarter, it
added. The report pointed out that while normally the Goods Trade Barometer
anticipated turning points in world trade by a few months, new sources of
uncertainty related to the pandemic may have reduced the predictive value
of its component indices.
The indicators point to a stalled recovery of international flights and
container shipping in October, but improved economic sentiment as
reflected by copper futures and press reports, it added.
Source: The Hindu Business Line, India Monday, 23 November 2020