October 7, 2020-After months of a sharp decline in global trade, signs are beginning to emerge that trade and economic activity are starting to pick up, according to the World Trade Organization.
One indication, for example, comes from purchasing orders by business managers. They show a sharp rebound in August after reaching record lows earlier this year.
For specific numbers, look to the WTO‘s review of data from JP Morgan and IHS Markit. It shows the manufacturing index climbing back to its norm of 50 after a drop to 27 in April while the service sector hovered around 47., moving closer to its trend after a dip to 21.8.
Sector Specific
Some sectors were hit harder by the pandemic this year than others. Looking at the second quarter of the year, global trade in agriculture products fell by only 5 percent, while trade in fuel and mining products contracted by 38 percent. Meanwhile, manufacturing products fells by 19 percent in the same quarter.
Industries performing the best under the pressure of the pandemic are textiles, computers, integrated circuits and pharmaceuticals. The sectors hardest hit by the global pandemic are in the automotive, travel, handbag, footwear and clothing fields, according to the WTO.
Trade forecasts for 2020 are less severe than previously projected. In April, the WTO estimated world trade would drop 12.9 percent for the year. Today, the organization forecasts total merchandise trade to decline by 9.2 percent for 2020 then increase by 7.2 percent in 2021.
US Trade Deficit Spikes
Meanwhile, even as trade started to come back, the U.S. trade deficit with the rest of the world climbed to its highest level in 14 years, according to data by the US Census Bureau. It rose to $67 billion in August. That compares with a trade deficit of $50 billion in August 2019.
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