Global Trade Stages Rapid Recovery
By Paul Hannon
Global trade flows bounced back strongly in the summer, marking
the largest rise in two decades as air and sea transport channels
reopened while demand for consumer goods surged.
The rebound has been led by China, which has increased its share
of total exports, and left trade volumes in September less than 2%
below their levels at the end of 2019.
The flows of goods across borders were 12.5% higher in the three
months through September than in the second quarter, when flows
fell by 12.2%, the CPB Netherlands Bureau of Economic Policy
Analysis said Wednesday. That was the largest rise since records
began in 2000, following the largest fall.
More timely indicators suggest the rebound in trade has
continued since the end of the third quarter. Surveys of purchasing
managers at factories around the world point to a continued rise in
export orders in October, while a measure of container traffic
compiled by Germany's Leibniz Institute for Economic Research and
the Institute for Shipping Economics and Logistics hit a record
high in the same month.
"The first slump due to the corona crisis seems to have been
overcome," said Torsten Schmidt, director of economics at the
The strength of the trade revival has varied, with China and
other developing countries in Asia leading the way, while the U.S.
has lagged behind. The CPB's figures indicate that while exports
from China and other developing countries in Asia had already
surpassed their pre-pandemic levels in September, exports from the
eurozone were still down 2.6%, and exports from the U.S. down
That pattern partly reflects the fact that China was the first
major exporter to suffer from a surge in infections, and emerged
from its lockdown just as Europe, the U.S. and much of the rest of
the world were entering theirs.
It was therefore in a strong position to meet surging demand for
protective medical equipment and electronic devices that helped
people work from home in other parts of the world. Economists at
UBS estimate that by July, China's share of world exports had risen
by 11%, while the U.S.'s share had fallen by 4% and France's share
"The overall picture is that the pandemic has disrupted the
Western Hemisphere far more than the eastern one," the economists
wrote in a note to clients.
The rebound in global trade flows seems set to be faster than in
recent recessions. In the wake of the global financial crisis,
trade flows took roughly two years to return to the level recorded
in September 2008, when Lehman Brothers collapsed.
That suggests countries around the world are experiencing a
two-speed rebound: Manufacturing and trade are returning rapidly
toward precrisis levels, as households continue to buy imported
goods, often supported by government cash. But the recovery has
been sluggish for local service providers such as restaurants and
movie theaters, which remain hampered by safety measures aimed at
containing the virus.
The World Trade Organization last week said its leading
indicator of trade flows had returned to its long-term average,
indicating that the recovery in trade flows is likely to be
sustained. However, it said the rate of growth will likely slow as
2020 draws to a close, as demand for goods that built up during the
spring lockdowns has largely been satisfied, while businesses have
almost rebuilt their inventories.
Write to Paul Hannon at firstname.lastname@example.org
(END) Dow Jones Newswires
November 25, 2020 09:38 ET (14:38 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.