BlackRock Investment Institute

Macro insights

Tracking the trade recovery

The Covid-19 shock caused a plunge in trade activity, but the tide may be turning.  Our real-time trade tracker – showing where trade volumes may stand in three months’ time – has rebounded into positive territory. This implies trade volumes are close to pre-Covid levels.

World trade

Chart note: Sources: BlackRock Investment Institute, CPB World Trade Monitor, U.S. Bureau of Economic Analysis and World Steel Association, with data from Refinitiv Datastream, Sept. 2020. Notes: The chart shows the three-month annualized percentage change in real global goods trade volume (in green) and a real-time "nowcast" (in orange) of where that trade volume may stand in three months' time. The nowcast uses principal component analysis based on 50 indicators, such as exports from South Korea and Taiwan, German manufacturing surveys and the export order components of global PMIs, to track global trade activity. Forward-looking estimates may not come to pass.

The reopening of economies is a major driver of trade revival. The rebound has been led by China thanks to its early emergence from lockdowns. Increased demand for medical equipment also helped. Trade tensions have been steady, but weaker Chinese imports from the U.S. could be a source of political tension as the U.S. election nears. In the euro area – a more open economy than the U.S. – trade data is also improving after a sharp drop during the activity shutdown.  

The weakness in the U.S. dollar may also have helped boost global trade volumes, particularly as it is driven by improving risk appetite rather than a change in interest rate spreads.

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