Recovery in international trade in goods has compensated for the sharp fall in world trade in services, hampered by the collapse of international travel. For 2021, Fitch anticipates a recovery of 8%, below 2010 levels, due to the slow recovery in trade in services.
Fitch anticipates a 9.6% fall in international trade in goods and services this year. Still, Fitch anticipates a slow recovery in international trade in services, which has been heavily penalised this year by the collapse of international travel.
As a result, by 2021, the financial ratings agency anticipates an 8% rise in international trade in goods and services, below the recovery in 2010 after the financial crisis that started two years earlier.
“International trade in goods and services fell less sharply than expected in 2020 and looks set to fall less than in 2009 in annualised terms, although the fall in global GDP is more pronounced,” reads the Economics Dashboard: World Trade Recovers as Goods Exports Rebound note.
The recovery in international trade in goods, which accounted for 77% of international trade last year, in the third quarter of this year was 3.8% below the levels of the fourth quarter of 2019 – before the pandemic crisis – and is still accelerating.
In September this year, trade in goods was 1.6% of the levels recorded in September 2019, which contrasted with the year-on-year fall of 17.5% in May this year.
Fitch highlighted China’s 21% rise in exports in October, when US orders reached record levels, suggesting a rise in US imports.
In addition, the recovery in international trade in goods was due to the consumption of durable goods because of “global consumption changes due to the pandemic” in the United States.
“This has, with the adoption of labour and digital consumption, increased imports of electronic products, while demand for medical equipment has also skyrocketed, in the United States and Europe”, the note reads.
The two categories of goods – electronic products and medical equipment – accounted for 23.2% of US and European imports together in the third quarter of 2020, up from 18.8% in the same period last year.
“This has been a factor supporting the strong recovery of Chinese exports”.
Despite this, Fitch noted that the estimate of world trade in goods and services in the third quarter of 2020 was 8.7% below the levels of the fourth quarter of 2019, “illustrating the downturn in trade in services”.
Fitch noted that the combined value of imports of services into the United States and the European Union fell by 32% between December 2019 and April, pointing out that by September, although on a smaller scale, the fall was 25%.
“This was due to the evident collapse of international travel”, the note stressed.
“While expectations about vaccine distribution increase hope, the possibility of further containment measures remains a risk of negative pressure,” he said.
According to Fitch’s economic models, international trade in goods and services will rise by 8% next year, which is a “weaker” rise than the 2010 recovery, “hampered by the slow recovery in trade in services”.
