A partial recovery in international trade, along with an accelerated recovery in China, give hope that the weakened global economy will get some muscle.
International merchandise trade begins to recover, starting in May, following the relaxation of Covid-19 restrictive measures, data from the OECD International Trade Statistics Programme in the G20 revealed on Thursday.
The international merchandise trade, the exchange of goods between countries, “plays a crucial role in economic development, binding producers and consumers located in different countries into a global economic system” according to the Organisation for Economic Co-operation and Development (OECD).
In a report published on Thursday, the organisation said “compared with the first quarter of 2020, exports fell by 17.7 per cent and imports by 16.7 per cent in the second quarter of the year, the largest fall since the 2009 financial crisis.” A larger decrease was seen in the EU, where the 27 member countries experienced 21.3 per cent fall on exports while imports fell by 19.0 per cent.
China was the only G20 economy to record export growth in the second quarter of 2020. In addition, China’s economy noted a larger growth in the second quarter than what analysts expected. Specifically, it grew 3.2 per cent, compared with the previous year, according to government statistics, while Refinitiv analysts were estimating a smaller growth of 2.5 per cent.
This means that the second-largest economy in the world averted recession, which gives hope to other countries who need to find demand for their products.
Nonetheless, one must curb the enthusiasm. ““As global and US lockdowns ease, trade flows begin to recover—leading indicators point that way. Yet downside risks remain, and we expect import and export volumes both to fall at record rates in 2020,” James Watson, senior economist at Oxford Economics.
Monthly data for the second quarter reveal the collapse in trade occurred in April 2020, when most countries had stringent Covid 19 containment measures in place, with G20 exports and imports falling by 18.7 per cent and 16.0 per cent respectively compared with the previous month.
But data for May and June point to a partial recovery from the April lows in nearly all G20 economies, as containment measures eased. The improvement continues through July, for those economies where data are available.
Concerning non-EU economies, India and Indonesia experienced particularly sharp falls in exports (down by 30.1 per cent and 15.9 per cent respectively) and imports (down by 47.4 per cent and 18.5 per cent respectively). Exports and imports also fell precipitously in North America: Canada, by 27.7 per cent and 25.5 per cent respectively; the United States by 28.2 per cent and 14.5 per cent; and Mexico by 36.1 per cent and 29.7 per cent.
In Japan, exports fell by 15.2 per cent and imports by 4.6 per cent, while in Korea exports dropped by 20.1 per cent and imports by 10.8 per cent. Australia registered only single-digit falls in both exports (down by 4.4 per cent) and imports (down by 5.6 per cent).
China recorded an export growth of 9.1 per cent in the second quarter of 2020, following a 9.3 per cent fall in the first quarter. Chinese imports however continued to fall, by 4.9per cent.
Similar collapses were seen in Europe. EU 27 exports fell by 21.3 per cent and imports by 19.0 per cent. France, Germany, Italy and the United Kingdom, saw exports fall by 29.3 per cent, 22.5 per cent, 26.5 per cent and 23.6 per cent respectively while imports fell by 20.4 per cent, 15.6 per cent, 23.3 per cent and 25.2 per cent respectively. Russian exports fell by 24.6 per cent and imports fell by 14.9 per cent.