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Global trade still below 2019 levels in most of the top
economies but gradual improvement endures, stronger recovery only
feasible in 2021; new release of the GTA Forecasting model
optimistic for both the value and volumes of global
trade.
Main Observations:
Trends observed in the real value of exports by the top
10 economies point to a gradual improvement of the situation in Q3
and Q4. Sharper recovery is predicted for Q1/Q2 of
2021
China is the only top economy to show consistent growth
in exports and recovery already in 2020
UK seems to be the most adversely affected country in
the mid-run which could be due to the impact of Brexit on top of
the adverse impact of the COVID-19 pandemic
The adjusted PMI new exports orders for manufacturing
(PMI NExO) readouts for November 2020 are above 50.0 points for all
the top 10 states apart from Japan and the global economy as a
whole and are pointing to a recovery for the third month in a
row
The new release of the GTA Forecasting model (4 Dec
2020) shows that the real value of global merchandise trade is
likely to go down in 2020 to USD 16,382 billion or -13.5%
year-on-year
We predict a year-on-year increase in the real value of
global trade by 7.6% in 2021 and 5.2% in 2022. The predicted CAGR
for the period 2021-2030 equals 3.5% (and has not changed in
comparison to the last release)
We expect the global trade volume in 2020 to go down to
12.7 billion metric tons and to increase to 13.6 billion metric
tons in 2021. Thus, we expect a decrease of
approx. 11.2% in the global volume of trade in 2020 and the
recovery in the forthcoming years with growth rates of 7.5%
year-on-year in 2021 and 4.1% in 2022; the forecasted CAGR for
global trade volume stands now at 3.2% for the period
2021-30
GTA Forecasting model predicts a bit sharper decline in
global trade volumes in 2020 followed by an increase in global
trade volume in 2021 in between the forecasts of WTO and IMF -
closer to the projection of the WTO though
Changes in Exports and Imports of the Top 10
Economies
In September 2020, China, India, and South Korea reported a
year-on-year (yoy) increase in the value of exports, it's a
particularly good development for India which seemed to be up to
this point the most adversely affected from the top economies
(please note a massive contraction of 61% yoy in April). for the
remaining economies the readouts are negative and range from -2.8%
for Japan to -10.0% for Brazil, -15.2% for Russia and -16.6% for
the UK.
The most up-to-date readout is available for the EU's external
exports for August 2020 and is equal to -8.7%.
The UK seems to be the most affected top economy in the medium
run but that could be also due to the effects of Brexit. At this
stage, it's difficult to predict the results of the negotiations
between the UK and EU on the trade-deal - the likelihood of no-deal
Brexit is high which could prove to be very harmful to both parties
and impact mutual trade from January 2021 onwards.
In October 2020, all top economies that have reported their
data, apart from China and Japan (+2.9% yoy), show a decrease in
exports ranging from -3.8% for South Korea, -6.9% for Canada, -7.0%
for the US to -9.3% for Brazil. it is worth to point out that South
Korea showed a yoy increase of 7.3% in September 2020.
Chinese exports show a consistent increase over 2019 levels
from June 2020 onwards. The yoy increase was close to 10% in August
and September 2020 and reached an impressive 11.3% in October
2020.
The only top economy to have already reported data for November
2020 is Brazil. The readout is pointing to a yoy decrease of only
1.2%. the situation in Brazil is improving from September 2020
onwards.
Overall, trends observed in the real value of exports for the
top 10 economies point to a gradual improvement of the situation in
Q3 and Q4 2020. Sharper recovery is predicted for Q1/Q2 of
2021.
In September 2020, three economies reported a rebound in
imports yoy: China (+13.6%), South Korea (+1.6%), and the UK
(+0.4%). The most significant decreases were reported for Japan
(-15.9%), India (-19.6%), and Brazil (-25.5%).
The available readouts for October 2020 show an increase only
in the case of China (+5.2%). The value of US imports was equal to
their 2019 values for the first month in the year (with a clear
upward trend from May 2020 onwards). The worst situation was
reported for Brazil -27.3% yoy, interestingly the situation
deteriorated in South Korea (similarly to exports).
Similar to exports, Brazil is reporting a significant yoy
improvement in its imports - with a fall of -2.6%.
Prospects for the Forthcoming Months
The adjusted manufacturing PMI new exports orders for
manufacturing (PMI NExO) readouts for November 2020 are above 50.0
points for all the top 10 states apart from Japan and are pointing
to a global recovery for the third month in a row.
Our prior concerns over the readouts in China and the US in
recent months have been unwarranted, November 2020 brought about an
improvement with PMI NExO at 50.48 for the US, 53.30 for China
(mainland), and 51.72 for the world as a whole. However, we have to
note that the PMI NExO dropped in comparison to October's readouts
for several other key economies: the EU (-3.13 points), Canada
(-2.70), Japan (-1.36), and India (-0.37).
The PMI NExO readouts for manufacturing point to
optimism for the forthcoming months - December 2020 and January
2021.
The trend in the PMI NExO is clear and consistent showing a
gradual improvement in market confidence from May onwards.
Global PMI NExO is at the level of 51.72
in November 2020 (51.24 in October).
The real GDP growth forecasts from IHS Markit Comparative World
Overview (published on 17 November 2020) point to a recession in
most of the top economies throughout 2020 and Q1 of 2021, apart
from China (recovery already in Q2 2020).
Growth in real GDP for the world as a whole will be
equal to -2.2% yoy for Q3 and -2.2% for Q4 of 2020, with a rebound
in Q1 2021 to +2.4% and a strong growth impulse of +8.8% only in Q2
2021.
The new release of the GTA Forecasting
model
The new release of the GTA Forecasting model from 4th December
2020 accommodated the most recent macroeconomic forecasts of the
IHS Markit Global Link Model, the actual data for the first two
quarters of 2020 from the Global Trade Atlas for all monthly
reporting states, and updated COVID-response factors. Please note
that it covers all trading partners and thus is not restricted to
the top ten economies of the world.
The GTA Forecasting model shows that global merchandise
trade is likely to go down in 2020 to USD 16,382 billion or -13.5%
year-on-year (it represents a slight downward adjustment
from the values predicted in the last release - USD 16,672 billion
or by 12.2% yoy).
Our estimated contraction in global trade value for the
entire 2020 is close to the results reported by the OECD and IMF
and close to the estimated optimistic scenario of the WTO from
April 2020.
We predict a year-on-year increase in the real value of
global trade of 7.6% in 2021 and 5.2% in 2022. The predicted CAGR
for the period 2021-2030 equals 3.5% (and has not changed in
comparison to the last release).
In terms of volumes, we now expect global trade in 2020
to go down to 12.7 billion metric tons and to increase to 13.65
billion metric tons in 2021 and 14.2 billion metric tons in
2022. Thus, we expect a decrease of approx. 11.2%
in the global volume of trade in 2020 (10.7% in the last release)
and the recovery in the forthcoming years with growth rates of 7.5%
year-on-year in 2021 and 4.1% in 2022.
The forecasted CAGR for global trade volume stands now
at 3.2% in the period 2021-30.
Furthermore, the forecasted fall in global trade volume in 2020
(-11.2%) is higher than the fall in 2009 (-7.7%) thus the
adverse impact of COVID-19 for global trade volume is larger than
the impact of the global financial crisis at least in the
short-run.
For comparative purposes, in an updated autumn report, the WTO
forecasted a 9.2% decline in the volume of world merchandise trade
this year, followed by a 7.2% rise in 2021. IMF projections from
October show a decrease of -10.4% in 2020 and a growth of 8.3% in
2021. Therefore, the GTA Forecasting model predicts a bit
sharper decline in 2020 followed by an increase in global trade
volume in 2021 in between the forecasts of WTO and IMF - closer to
the projection of the WTO though.
Looking globally, our forecast is close to the
"optimistic" scenario for the development of world merchandise
trade published by the World Trade Organization in April
2020.
The forecasts should be treated with a large degree of caution.
Several scenarios are still possible. Economic developments will
critically depend on the shape of the pandemic curve and the
severity of containment efforts taken globally and by individual
states. The recent analysis performed by the GTA Forecasting team
showed that COVID-19 impacted bilateral trade flows adversely and
in a statistically significant manner. This effect on global trade
endures from March 2020 onwards.
