Global trade recovers to 75% of pre-pandemic levels as monthly exports rise

Exports from China have returned to pre-virus levels, but exports from the US are still 13% lower

While the largest monthly increases in exports were in China and the US, China’s exports had returned to their pre-virus levels, but exports from the US were still 13% below. AP

Global trade has recovered to about 75 per cent of its pre-Covid-19 crisis levels as every region recorded a rise in monthly exports, although at varying degrees of speed and strength, according to Capital Economics.

China and the US recorded the biggest increases in monthly exports among all regions, Capital Economics said in its Global Monitor report on September 25. However, while China's exports had returned to their pre-virus levels by the end of July, exports from the US were still 13 per cent lower, it said, citing world trade data from the CPB Netherlands Bureau for Economic Policy Analysis.

More recent data, including Purchasing Managers Index readings for September, indicate the recovery has continued throughout the third quarter.

"Given the encouraging signs from the timely hard data and survey evidence, we suspect that trade is currently three quarters of the way back to its pre-virus level," the report by Capital Economics' global economist Gabriella Dickens said.

The signs of recovery come after the Covid-19 pandemic hammered the global economy during the second quarter, disrupting international trade flows, supply chains and air travel. The virus has infected more than 32.7 million people and the death toll has exceeded 994,000, according to Worldometer statistics. About 24 million people have recovered so far.

In July, world trade had regained two-thirds of flows wiped out by the Covid-19 pandemic, standing at 6.6 per cent below its December 2019 peak. This was an improvement from May, when world trade fell 17 per cent below its December 2019 level.

World trade volumes jumped by 4.8 per cent in July following a record 7.8 per cent rise in June, Capital Economics said, citing CPB Netherlands Bureau data.

Trade among Asian countries – Japan, South Korea, Taiwan and Singapore – continued to recover in August with volumes just 1.2 per cent below pre-virus levels, compared to 4.8 per cent below in July, the report said.

September's Purchasing Managers' Index (PMI) estimates for advanced economies showed that exports for developed markets manufacturers jumped to 51.8, up from 50.8 in August – one of the only sub-components to rise.

World trade has performed better than gross domestic product declines as "strong demand for Covid-related products has partially offset weakness elsewhere", it said.

For example, in China, exports of goods such as personal protective equipment, medical products and electronics has accounted for roughly half of the 10 per cent year-on-year growth in exports in August.

Similarly, the International Institute of Finance suggests that trade across emerging markets is also starting to recover this month, according to an EM Growth Tracker report published earlier this month.

"August marks the first time since the Covid-19 shock with improving trade figures" across emerging markets, the report said.

However, questions on the trade front remain with restrictions in place to contain the pandemic deemed a "drag on activity" and US-China trade tensions continuing to weigh on the trade outlook for emerging markets, it said.

The global economy will contract this year by more than 4 per cent, with an estimated swing of 6.8 percentage points leaving a shortfall in global output by the year end of more than $6 trillion (Dh22tn), according to the United Nations Conference on Trade and Development.

Trade will shrink by around one-fifth this year, foreign direct investment by up to 40 per cent and remittances will drop by over $100 billion, the UN agency said in its Trade and Development Report on September 22.