COVID-induced drivers of trade outpacing GDP may stick

Significance

It sees goods trade declining by 9.2% in 2020, with services trade falling by a steeper 23% from peak to trough, exacerbated by travel restrictions. The decline in domestic services, which are less trade-dependent than high-demand sectors such as electronics, is crucial to this asymmetry.

Impacts

• The shift from shopping malls and high-street shops to online will increase demand for foreign goods over local production.
• The pandemic economy is evolving; oil and gas trade bottomed in June and has risen to near pre-pandemic levels but may face more disruption.
• Upside potential exists if a vaccine or treatments prove effective, but this would not be immediate.
• Risks to the recovery of global trade and GDP are firmly to the downside.