According to the UNCTAD World Economic Situation and 2020 Prospects Report, global trade growth is expected to increase to 2.3 percent in 2020.
According to the World Economic Situation and 2020 Prospects Report prepared by the United Nations Conference on Trade and Development (UNCTAD), global trade growth is expected to increase to 2.3 percent with a limited recovery in 2020 and 3.2 percent in 2021.
According to the information compiled from the report, long-lasting trade tensions and slowing economic activities caused a decline in global trade. The report also noted that over the past year, global trade tensions have become more widespread, expanding beyond China and the United States to include more countries and product groups.
Sources of global trade tensions were cited as trade uncertainty related to Brexit, complaints of various countries against Indian tariffs, allegations of mutual protectionism between the European Union and the United States, and the trade dispute between the Republic of Korea and Japan.
Pointing out that as trade tensions increase, there are signs of disruptions in global supply chains, the report noted that trade disputes increase cyclical winds in the electronics and automobile sectors, which have large production networks.
The report emphasized that the high uncertainty surrounding future trade actions reduced investment growth in many countries, causing business confidence to deteriorate, and stated that these developments caused a decline in international trade activities by suppressing the global demand for capital and intermediate goods.
The recovery projected for 2020 will be subject to high risks
According to the report, global trade growth is expected to recover modestly to 2.3 percent in 2020 and 3.2 percent in 2021. These forecasts assume that trade uncertainty will continue but will not increase further. The report explained that the easing of tensions between the US and China has led to global trade growth being higher than the baseline, with Brexit impacts not yet fully priced in.
The assessment found that the modest recovery projected for 2020 would be subject to high risks; the trade dispute between the Republic of Korea and Japan could disrupt the highly globalized value chain of semiconductors; tariff trade growth in developed and developing regions has not weakened significantly since 2018, but for the previous six years It was reminded that the average growth rates fell well below.
The sharp decline in global scheduled trade growth last year was due to a contraction in import demand from China and other emerging Asian economies, reflecting the impact of trade tensions on the region’s extensive cross-border production networks, as well as the slowdown in domestic demand in China.
Total import growth slowed significantly
In the United States, total import growth slowed significantly as tariff increases contributed to a double-digit decline in imports from China for the year, according to the report.
The report claimed that the slowdown in capital expenditures and disruptions in the automotive industry reduced import demand in the Eurozone, and noted that among developing regions, the impact of trade tensions on import growth was exacerbated by country- or region-specific factors. For major commodity exporters, including several economies in Africa, West Asia and Latin America, import growth remains weak as the slowdown in commodity prices continues to impact domestic investment activity.
In Latin America, the report stated that the deepening economic crisis in Argentina caused the collapse of import demand with a sharp contraction in capital expenditures, and underlined that the economic slowdown seen in India and other major economies in South Asia suppressed the demand for tariffed imports.
Oil markets will continue their volatile course in 2020
Commodity prices eased last year as global growth slowed and high trade tensions weighed on demand, according to the report. Supply disruptions in several commodity markets, including crude oil, triggered speculative buying of futures contracts throughout the year. “The resulting price increases were mostly short-lived, as growing concerns about weakening global demand continued to drive prices lower,” the report said. “Most commodity prices are expected to remain weak as the subdued demand outlook suppresses supply constraints.”
It is stated that the extension of crude oil production cuts led by the Organization of Petroleum Exporting Countries (OPEC) and the Russian Federation has prevented excessive supply in the context of weakening global demand and rapidly increasing supply from the USA.
The evaluation included the following:
“Oil markets will continue their volatile course in 2020. Brent crude oil will average $59.50 per barrel. Intermediate price cycles of other commodities in this category, including copper, lead, zinc and aluminum, will trend downward due to low industry demand. The demand for non-precious metals As demand is largely tied to China’s growth prospects, prices for these commodities will decline in 2020. In contrast, the sub-index for precious metals shows a sustained upward trend reflecting rising prices of gold, platinum, palladium and silver as risk-averse investors flee these commodities .”
Effect of meteorological developments on harvest in Australia
The report pointed out that heavy rains in the Midwestern region of the United States in May last year caused an increase in international prices of grains, and estimated that average food prices would remain stable in 2020. Recent severe meteorological events in Australia are expected to result in poor grain harvests in several areas.
As grain stocks remain at comfortable levels, such events are expected to have limited impact on international grain prices and food prices will continue to be prone to region-specific price increases, especially in developing countries.
Source: https://www.aa.com.tr/tr/ekonomi/kuresel-ticaret-2020-de-yuzde-2-3-buyuecek-/1709975
