The global trade in services between nations is set for its biggest decline in 30 years, according to the United Nations.
Services trade will fall 15.4 per cent this year, which would be the biggest decline since 1990 and a much steeper fall than the 9.5 per cent drop recorded in 2009 after the global financial crisis, the UN’s Conference on Trade and Development said on Wednesday.
Overall global merchandise trade is set to fall 5.6 per cent this year, which would be the biggest decline since the financial crisis, when trade fell 22 per cent in 2009.
The "nowcasts" for global trade are being issued alongside the publication of Unctad's 2020 Handbook of Statistics, detailing global trade patterns during 2019.
The decline in services is attributed to the drop in travel, transport and tourism activity as a result of the Covid-19 pandemic.
The health crisis heightened demand for up-to-date figures on how the global economy was affected, while also presenting challenges for modelling the data, Unctad said.
“The models that nowcast international trade and GDP had to grapple with some of the most unusual circumstances in living memory,” Unctad’s chief statistician, Steve MacFeely, said.
“So much so, the existing models broke down under the strain and had to be redesigned and rebuilt during the year.”
The statistical bulletin shows global merchandise trade had already declined 2.8 per cent last year as the world’s two biggest economies, the US and China, became embroiled in a trade dispute, which led to the imposition of retaliatory tariffs.
Nowcasts included in the statistical bulletin show global exports are set to fall 11.9 per cent from last year’s total of $18.9 trillion, global services exports are set to drop 19.9 per cent from last year’s $6.1tn total and that global GDP growth will shrink by 4.3 per cent. The International Monetary’s Fund forecast a 4.4 per cent contraction.
The Handbook of Statistics showed that global foreign direct investment rose 3 per cent last year to $1.54tn. However, in October the organisation said global FDI flows are forecast to fall 40 per cent this year, after a 49 per cent decline in the first half.
Governments around the world have provided $12tn in fiscal stimulus measures to support the global economy, with central banks adding a further $7.5tn in monetary measures as at the end of September, according to the IMF.
The fiscal and monetary support has helped to underpin the global economy, with support programmes allowing companies to keep people in work.
On Wednesday, the Organisation for Economic Development said that unemployment in its 37-member countries declined to 7.1 per cent in October, from 7.3 per cent a month earlier. The decline largely reflected a return to work of furloughed workers in the US and Canada.