World merchandise trade remained strong in the fourth quarter of 2020, after trade rebounded in the prior quarter from a deep Covid-19 induced slump, according to the World Trade Organization (WTO) Goods Trade Barometer.
The Goods Trade Barometer’s current reading of 103.9 is above both the baseline value of 100 for the index and the previous reading of 100.7 from last November, signalling a marked improvement in merchandise trade since it dropped sharply in the first half of last year.
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The WTO, however, says the pace of expansion in the fourth quarter is unlikely to be sustained in the first half of 2021 since key leading indicators appear to have already peaked. It adds, the indicator may not fully reflect resurgence of Covid-19 and the appearance of new variants of the disease, which will undoubtedly weigh on goods trade in the first quarter of 2021.
The WTO’s most recent trade forecast of 6 October 2020 predicted a 9.2% drop in the volume of world merchandise trade in 2020, but the actual decline may be slightly less severe.
Prospects for 2021 and beyond, moreover, are increasingly uncertain due to the rising incidence of the pandemic worldwide and the emergence of new variants of the disease. Recovery will depend to a large extent on the effectiveness of vaccination efforts. The WTO expects to release its next trade forecast in mid-April.
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