Raw Agricultural Exports Helping Drive World Trade Rebound

GENEVA, SWITZERLAND – World merchandise trade appears to have rebounded strongly after plummeting in the midst of the COVID-19 pandemic, but whether growth can be sustained going forward is unclear, according to the World Trade Organization’s (WTO) latest Goods Trade Barometer. A sharp rise in the barometer index was driven by a surge in export orders, but mixed readings in other components and the resurgence of COVID-19 could weigh on trade in the coming months. The current reading marks a dramatic improvement from last August, which reflected collapsing trade and output in the second quarter as lockdowns and travel restrictions were employed to fight the virus. The latest reading also 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. The recovery in the overall barometer index was driven by export orders (113.5) and agricultural raw materials (103.6), both of which finished firmly above the trend. The indices for container shipping (102.0) and automotive products (94.6) also recovered substantially to near trend, while those for air freight (88.5) and electronic components (94.6) remained below trend. The latest reading is consistent with the WTO’s revised trade forecast (from October), which predicted a 9.2 percent decline in the volume of world merchandise trade this year. This outcome would require a sharp rebound in the third quarter following the 17.2 percent year-on-year decline registered in the second quarter.
(SOURCE: All Ag News)