Chapter III World trade and GDP, 2019-20 World trade and GDP 18 Merchandise trade volume 19 Primary commodity prices 21 Exchange rates 22 Value of world trade 23 COVID-19 and trade 26 Outlook for 2020 29 1016 World merchandise trade volume declined by The COVID-19 pandemic is likely to produce 0.1 per cent in 2019, the first contraction since a significant contraction of world trade in the global financial crisis of 2008-09. Trade was 2020. New export orders for manufacturing weighed down by persistent trade tensions as and services shown in purchasing managers’ well as by weaker global GDP growth, which indices (PMIs) fell sharply in the first and second slowed to 2.3 per cent in 2019 from 2.9 per cent quarters of 2020. in 2018. Trade declined in US dollar terms in 2019. GDP growth turned negative in the first quarter World merchandise exports fell 3 per cent of 2020 for the United States (-1.2 per cent), to US$ 18.89 trillion. World commercial the euro area (-3.8 per cent) and China services exports increased by 2 per cent to (-9.8 per cent). Further declines are expected US$ 6.07 trillion but the pace of growth was in the second quarter and beyond. down sharply from the 9 per cent recorded in 2018. 1117 World Trade Statistical Review 2020 World trade and GDP The volume of world merchandise trade declined in 2019 for the first time since the financial crisis of 2008-09, weighed down by rising trade tensions and weakening economic growth. Chart 3.1 World merchandise trade volume and real GDP growth, 2012-19 (Annual percentage change) 5 4.7 4 3 3.1 2.5 2.9 2.9 2.7 2.8 2.8 2.5 2 2.3 2.4 2.3 2.4 2.3 1.4 1 Annual percentage change percentage Annual 0 -0.1 -1 2012 2013 2014 2015 2016 2017 2018 2019 Trade GDP Average trade growth 2008-19 Average GDP growth 2008-19 Source: WTO Secretariat for trade, consensus estimates for GDP. Note: GDP growth is calculated with market exchange rate weights. • Merchandise trade volume declined by 0.1 per cent in • The decline of 0.1 per cent for merchandise trade volume 2019, compared with 2.9 per cent growth in 2018. World in 2019 was well below the average annual growth rate of GDP growth slowed to 2.3 per cent, down from 2.9 per 2.3 per cent since the financial crisis of 2008-09. GDP cent the previous year. growth of 2.3 per cent last year was in line with its average rate over the past ten years. • The US dollar value of merchandise trade fell year-on-year, dropping 3 per cent to US$ 18.89 trillion in 2019. Trade • Although the first cases of COVID-19 were recorded in late declined more steeply in value terms than in volume terms 2019, the crisis did not contribute to the slowdown for the due to falling export and import prices. year. The pandemic is expected to lead to sharp declines in trade and GDP in 2020. • Commercial services trade grew by 2 per cent in 2019, down from 9 per cent in 2018, as growth slowed and trade tensions escalated. 18 Chapter III: World trade and GDP, 2019-20 Merchandise trade volume Global merchandise trade volume peaked in the third quarter of 2018 before stalling for several months and turning down in the fourth quarter of 2019. Chart 3.2 World merchandise trade volume, 2015Q1 – 2019Q4 (Volume index 2015=100 and year-on-year percentage change) 112 6.0 5.6 110.6 110 5.2 5.0 4.9 4.6 108.9 108 4.2 4.0 3.8 3.5 3.6 106 3.0 2.6 104 2.0 2.0 1.6 1.7 1.8 1.5 1.6 Volume index 2015=100 index Volume 0.0 102 1.0 1.0 change percentage Year-on-year 0.3 100 0.0 -0.3 -1.0 98 -1.0 2016Q3 2017Q1 2017Q2 2015Q1 2015Q2 2015Q3 2017Q3 2019Q1 2017Q4 2018Q1 2016Q1 2019Q3 2015Q4 2018Q3 2019Q2 2018Q2 2016Q2 2019Q4 2018Q4 2016Q4 Year-on-year % change (right axis) Index, 2015Q1 = 100 (left axis) Sources: WTO-UNCTAD. • Seasonally-adjusted merchandise trade volume was down • Other factors contributing to economic uncertainty by 1.0 per cent in the fourth quarter of 2019 compared with included the government shutdown in the United States the same period in 2018 and 1.2 per cent down compared in 2018-19, the United Kingdom’s departure from with the third quarter. This is equivalent to a 4.6 per cent the European Union, and changes in monetary policy decline on an annualized basis. in major economies. • The long-running trade dispute between the United States and China led to the raising of tariffs and contributed to trade policy uncertainty in 2019. 19 World Trade Statistical Review 2020 Merchandise trade in the fourth quarter of 2019 varied strongly across regions. Chart 3.3 Merchandise exports and imports by region, 2015Q1 – 2019Q4 (Volume indices 2015 Q1=100) Exports 120 110 100 Volumes indices Q1=100 2015 90 80 2017Q1 2017Q3 2017Q2 2015Q1 2017Q4 2016Q1 2019Q1 2018Q1 2015Q3 2015Q2 2015Q4 2016Q3 2019Q3 2016Q2 2018Q3 2019Q2 2016Q4 2018Q2 2019Q4 2018Q4 Imports 120 110 100 Volumes indices Q1=100 2015 90 80 2017Q1 2017Q3 2017Q2 2015Q1 2017Q4 2016Q1 2019Q1 2018Q1 2015Q3 2015Q2 2015Q4 2016Q3 2019Q3 2016Q2 2018Q3 2019Q2 2016Q4 2018Q2 2019Q4 2018Q4 1 North America South America Europe Asia Other regions2 1 Refers to South and Central America and the Caribbean. 2 “Other regions” comprise Africa, Middle East and the Commonwealth of Independent States, including associate and former member states. Sources: WTO and UNCTAD. • Asia’s merchandise exports were down 2.2 per cent • On imports, South America recorded the strongest decline quarter-on-quarter in Q4 of 2019. “Other regions” also at -2.9 per cent in Q4 of 2019, followed by North America saw a decline of 2.2 per cent. North America’s exports at -2.5 per cent and Europe at -1.8 per cent. Asia’s imports were down 1.0 per cent over the same period while South recorded a more modest decline of -0.4 per cent while the America’s export growth remained static at 0 per cent. imports of “Other regions” rose 0.4 per cent. • Europe’s exports were up slightly in Q4 of 2019, with an increase of 0.4 per cent. 20 Chapter III: World trade and GDP, 2019-20 Primary commodity prices Commodity price fluctuations in 2019 were dominated by fuel prices, which were down 17 per cent compared with 2018. Chart 3.4 Prices of primary commodities, January 2014 – January 2020 (US$ price indices, January 2014=100) 120 100 80 60 US$ price indices, January 2014=100 January indices, US$ price 40 20 2017M10 2015M10 2014M10 2019M10 2016M10 2018M10 2017M01 2017M07 2015M01 2014M01 2017M04 2015M07 2019M01 2014M07 2016M01 2018M01 2019M07 2016M07 2018M07 2015M04 2014M04 2019M04 2016M04 2018M04 2020M01 Food Agricultural raw materials Metals Fuels Source: IMF primary commodity prices. • Fuel prices were down 17 per cent in 2019 and are • Food and agricultural raw materials recorded declines expected to record further declines in 2020 as travel of 3 per cent and 5 per cent respectively in 2019. restrictions and social distancing measures to combat the COVID-19 pandemic have reduced energy demand. • In 2019, metals prices were up 7 per cent over the previous year. 21 World Trade Statistical Review 2020 Exchange rates Exchange rates remained relatively stable in 2019 despite the heightened level of trade policy uncertainty. Chart 3.5 Exchange rate indices for selected economies, January 2014 – January 2020 1 (Index, January 2014=100) 130 120 110 100 Index, January 2014=100 90 80 01-2017 01-2014 07-2017 07-2014 01-2016 01-2018 01-2019 07-2016 01-2015 10-2017 07-2018 10-2014 07-2019 07-2015 10-2016 04-2017 04-2014 10-2018 10-2019 10-2015 04-2016 04-2018 04-2019 04-2015 01-2020 United States Japan China Euro area United Kingdom 1) Nominal effective exchange rate indices against a broad basket of currencies. Source: Bank for International Settlements. • The dollar rose 3 per cent on average against the • The US dollar appreciated during the onset of the currencies of US trading partners, while the euro COVID-19 pandemic, reflecting the currency’s role as a and renminbi fell 1 per cent and 2 per cent respectively financial safe haven. Further strengthening of the dollar in 2019. could increase financial strain for net foreign borrowers with dollar-denominated debts. • The Japanese yen appreciated by 5 per cent in 2019 while the United Kingdom pound remained static at 0 per cent. 22 Chapter III: World trade and GDP, 2019-20 Value of world trade The dollar value of world merchandise exports was down in all four quarters in 2019 compared with the previous year, with the strongest declines recorded in regions that export natural resources in particular. Chart 3.6 Growth of merchandise export values by region, 2018Q4 - 2019Q4 (Year-on-year percentage change) 12 11.8 10 9.0 8 6 4.1 4 3.9 3.9 2 1.2 0.9 0 -1.1 -1.0 -1.0 -1.3 -1.2 -1.4 -2 -2.1 -2.4 -2.3 -2.7 -2.4 Year-on-year percentage change percentage Year-on-year -3.2 -3.2 -3.4 -4 -3.9-3.7 -4.4 -5.0 -5.0 -6 -5.7 -8 -8.6 -8.9 -10 -11.4 -12 World Asia Europe North America South America1 Other regions2 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 1 Refers to South and Central America and the Caribbean.