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Global recovery expected in 2021 with particularly
strong growth impulse in Q2; PMI NExO readouts, however, bring
mixed signals for the first time since May 2020.
Main Observations
All top ten economies, apart from China (+4.0),
suffered a contraction in exports in 2020 which varied from -5.4%
for South Korea, -6.9% for Brazil, -9.1% in Japan, -12.5% in Canada
& -12.9% in the case of the U.S.; on the other hand, imports
contracted in all the states
Chinese exports are consistently growing yoy for seven
months in a row (for imports four months in a row); the trends in
exports for the top ten are optimistic with a clear recovery
already in Q4 2020 for South Korea and Japan
Imports for most of the top ten economies were struck
harder than exports in 2020; on a positive note we see a continuing
recovery in imports in China, the U.S., and Canada
and generally, in December 2020, this points to increasing market
optimism and recovery in consumption demand
The adjusted manufacturing PMI new exports orders (PMI
NExO) readouts for January 2021 are above the benchmark value of
50.0 points for global manufacturing (50.09) and for four top ten
economies: EU (54.64), the U.S. (53.95), India (53.91) & South
Korea (52.38). The lowest PMI values are reported for Russia
(41.26) and China (47.42)
The observed trends in the PMI NExO are becoming
blurred, in contrast to the preceding two quarters of 2020 which
were pointing to a rise in market optimism from May 2020 onwards in
all the top ten states; now the situation is becoming more complex
and heterogenous
IHS Markit real GDP forecasts for 2021 are
optimistically pointing to a global recovery already in Q1 and a
strong boost in growth for both advanced and emerging states in Q2
2021
Changes in Trade of the Top 10 Economies
With the new trade data updated regularly in our Global Trade Atlas as reported
by the states, we have the first estimates of the total contraction
in trade in 2020 for some of the top ten economies
Chinese exports have increased in 2020 by 4% yoy - the
contraction was present only in Q1 (-13.4% yoy) followed by a
steady recovery - +0.1% in Q2, +8.8% in Q3, and +17.1% in
Q4
All other top ten economies suffered a contraction in
exports in 2020 which varied from -5.4% for South Korea, -6.9% for
Brazil, -9.1% in Japan, -12.5% in Canada & -12.9% in the case
of the U.S.
It is worth noting that exports were growing in value
yoy in Q4 of 2020 for both Japan (+3.5%) and South Korea (+4.2%);
overall East & Southeast Asia seems to be the origin of the
global recovery
It is clear that globally (apart from China), Q2 was the worst
quarter on record; the COVID-19 pandemic proved to be the worst
black swan in a century with significantly more adverse impact on
global trade than the impact of other recent pandemic and the
financial crisis of 2008-9
All economies have already reported the data for October; the
readouts vary from -25.5% in the case of Russia and -15.7% yoy in
the UK to -4.4% in the case of EU external exports and -3.8% for
South Korea, only two economies reported yoy increase in the value
of exports, namely China (+11.3%) and Japan (+2.9%)
In November 2020, Chinese exports were above by 21.1% yoy and
in South Korea by 4.1%, the growth rate was negative in the case of
all other reporters and ranged from -0.3% for Japan to -8.6% for
India
In December 2020, three countries showed a significant yoy
increase in the value of exports, are China (+18.6%), South Korea
(+12.6) & Japan (+7.7%); the U.S. (-2.0%) and Canada (-2.1%)
reported a decline with the value for Brazil close to 2019 figure
(only -0.2%)
Only one top ten economy has already reported the value of
exports in January 2021, it's Brazil with a growth of +2.2%
yoy
In most of the top ten economies the contraction in imports in
2020 (apart from the U.S. and Canada), was deeper than the
contraction in exports; all the economies that have already
reported the full data for 2020, suffered a decline in 2020 ranging
from -0.4% yoy for China, -6.4% in the U.S., -7.1% in South Korea,
-10.4% in Brazil, -10.7% in Canada to -11.9% in Japan
All top ten economies reported contraction in imports in Q1 and
Q2 of 2020 with the second quarter once again the worst on record;
in Q3 imports were growing only in the case of China (one quarter
later than in exports); in Q4 2020 imports were above of 2019 level
in a much larger number of states: China (+5.7%), the U.S. (+4.3%),
Brazil (+1.9%) and Canada (+0.8%)
The readouts for October 2020 showed an increase in the value
of imports only in the case of China (+5.2%). The value of U.S.
imports was equal to their 2019 values for the first month of the
year (with a clear upward trend from May 2020 onwards). The worst
situation was reported for Brazil - 27.3% yoy, also India, Russia
& Japan recorded a contraction of more than -10.0% yoy
The data for November is now available for most of the top ten
group; the data shows a yoy increase in Canada (+1.5%), China
(+5.0%), the U.S. (+6.6%), and the UK (+12.0%); all the other show
a contraction ranging from -1.9% for South Korea to -13.3% yoy for
India
December is usually a better month for imports in advanced
states fueled by the holiday season and new year celebrations. All
the countries that have reported data for December 2020 show a
significant increase in the value of imports yoy ranging from +2.2%
in Canada to a massive increase of +46.7% in Brazil
It is worth noticing that recovery in imports seems to be
consistent and continuing in several key countries, these are in
particular China (Four months of recovery in a row), the U.S.
(third month in a row), and Canada (Two months in a row); it could
be indicative of growing consumer confidence and increasing
internal demand pointing to a recovery
With incoming data on progress with mass vaccination programs
in particular in key advanced states, the likelihood of stricter
lockdowns decreases and that could have a positive impact on
overall market optimism unless the third wave of COVID-19 pandemic
escalates out of control
Brazil reported a -1.5% decline yoy in the value of imports in
January 2021
Prospects for the Forthcoming Months
The reaction in trade in 2020 was consistent with the
escalating global COVID-19 pandemic and steps taken by individual
countries/territories in controlling or mitigating it. The
situation in 2021 is likely to be similar with the development
dependent on the success of mass vaccination programs and the
severity of the third wave. The overall impact of
COVID-19 on global trade and the global economy will depend on the
duration, severity, and spatial distribution of the pandemic and
associated severity of containment efforts taken by individual
states.
The cumulative number of confirmed cases of COVID-19
globally reached 107.8 million and 2.4 million deaths in February
2021 (Weekly Operational Update on COVID-19 from 13 February
2021)
The cumulative number of cases is the highest in the
U.S. (26.6 million), India (10.8 million), Brazil (9.5
million) followed by Russia (4.0 million), the UK (3.9
million), France (3.3 million), Spain (2.9 million), Italy (2.6
million), Turkey (2.5 million), Germany (2.3 million), Columbia
(2.1 million), Argentina (2.0 million), Mexico (1.9 million),
Poland (1.6 million), South Africa & Iran (1.5 million each),
Peru & Ukraine (1.2 million each), Indonesia (1.1 million),
Czech Republic & Netherlands (1.0 million each). Therefore,
21 countries so far have registered more than one million
cases of COVID-19. The worst affected regions from the global
perspective are still the Americas, Europe, and South-East
Asia
The adjusted manufacturing PMI new exports orders for
manufacturing (PMI NExO) readouts for January 2021 are above the
benchmark value of 50.0 points for global manufacturing (50.09) and
for four top ten economies: European Union (54.64), United States
(53.95), India (53.91) & South Korea (52.38). The lowest PMI
values are reported for Russia (41.26) and China
(47.42)
The PMI for the U.S. shows a positive trend in the
third month in a row and the EU for the second month in a row. On
the other hand, PMI is falling for Japan (Third month in a row),
Brazil, China, Russia, South Korea, and the world as a whole
(Second month in a row)
In comparison to December 2020, the highest increases
can be identified for India (+2.13) and the U.S. (3.24) which could
reflect the optimism related to the handling of power to the new
Biden-Harris administration, the largest falls, in turn, can be
seen in Russia (-9.17) and the UK (-7.20); the results for the UK
can reflect the disappointment with the final UK-EU Trade Agreement
and the first real consequences of Brexit on the external
borders
The observed trends in the PMI NExO are becoming
blurred, in contrast to the preceding two quarters of 2020 which
were pointing to a rise in market optimism from May 2020 onwards,
now the situation is becoming more complex and
heterogenous
Both PMI NExO for global manufacturing and global
services showed a rapid COVID-19 crisis and quick recovery,
however, the readouts for services are permanently below the 50.0
benchmark; in recent months the situation in services started to
improve, however, it deteriorated somehow for the global
manufacturing sector
The most recent real GDP growth forecasts from IHS Markit were
published on 15 February 2021. The forecast includes the baseline
scenario of the impact of COVID-19 on the global economy and
individual states
We now estimate the contraction of global GDP by 3.7%
in 2020 varying between -4.8% for advanced, -1.9% for emerging, and
-6.4% for developing economies
We predict global recovery in 2021 with year-on-year
real GDP growth rates predicted to reach 5.0% (4.2% in 2022) thus
adjusted upwards in comparison to the January release. The growth
rates are predicted to vary between 4.3% (3.7 in 2022), 5.9% (4.9%)
for emerging, and 5.3% (4.5%) for developing states
From a quarterly perspective, both Q3 (-1.7%) and Q4
(-0.9%) proved to bring a continuing global recession in
2020. We predict a global recovery already in the Q1 of
2021 (3.0%) driven mostly by emerging states with a stronger boost
only in Q2 of 2021 (9.1%)
Recovery in China has already started in Q2 of 2020 following
the COVID-19 related contraction in the first quarter.
Apart from China, only two other economies out of the top
ten group are predicted to grow in the first quarter of 2021, these
are India (+1.2%) and South Korea (+0.4%). The major recovery in
all the states has been predicted constantly for the second quarter
of 2021
This column is based on data from IHS Markit Maritime &
Trade GTA & GTA Forecasting
The full version of this article is available on the
Connect platform for IHS Markit clients with a subscription to GTA
and GTA Forecasting.
