East Asian Economies Lead Global Recovery from COVID-19

Developing countries, especially East Asian economies, have been leading the global recovery from the COVID-19 pandemic with strong export growth and gains in market share, said the United Nations Conference on Trade and Development (UNCTAD) on Wednesday.

Led by trade in goods, global trade recovered in the last quarter of 2020, reducing its overall decline for the year to about nine percent, the Geneva-based UN body said in its quarterly Global Trade Update.

While imports and exports of goods grew by about eight percent in the fourth quarter (Q4) of last year, trade in services stagnated as measures taken in the global fight against COVID-19 continued to affect sectors such as travel.

“The recovery process has been uneven, with many countries lagging,” said UNCTAD economist Alessandro Nicita, who worked on the report.

The report shows that the recovery in Q4 2020 was largely driven by the trade of goods from and to developing countries, especially by the very strong performance of East Asian economies.

On a year-over-year basis, trade in goods originating from East Asia grew about 12 percent in Q4 2020, with goods imports increasing by about 5 percent. China’s import and export trade grew by 5 percent and 17 percent, respectively.

In contrast, negative trends remained for goods exports originating from most other regions, even in Q4 2020.

“The recovery in Q4 2020 was more broad-based, as trade in most sectors recorded positive growth,” Nicita said.

However, besides services, trade in the energy and transport equipment sectors continued to be well below average levels.

The report projects that the first quarter of 2021 will record a slowdown in the recovery of trade in goods (a 1.5-percent drop relative to Q4 2020) and a further decline for trade in services (a 7-percent drop relative to Q4 2020), largely because of continued disruptions in the travel sector.

The UN trade body highlights persisting concerns about COVID-19, noting that uncertainty about the timing and magnitude of stimulus packages will result in a lower trade rebound in the coming months.

The Global Trade Update is issued quarterly by UNCTAD and presents trends and short-term forecasts for world trade.