Global Services Trade (GST) in the third quarter of 2020 fell 24 per cent compared to the same period in 2019.
The World Trade Organisation (WTO) statistics released on Tuesday, said the growth in the third quarter GST growth represented only a small uptick from the 30 per cent year-on-year decline registered in the second quarter, in marked contrast to the much stronger rebound in goods trade.
Preliminary estimates suggest that GST remained depressed through November, down 16 per cent year-on-year, based on data from 39 economies accounting from more than two-thirds of world services trade and this marks a slight improvement from October, when services trade was down 18 per cent compared to the previous year.
“Services exports in November were down 24 per cent in the United States, 15 per cent in the United Kingdom and more than 20 per cent in many European countries. Uganda, a country whose economy is highly dependent on tourism, saw services export revenues drop 57 per cent compared to pre-pandemic levels. China’s services exports also slowed (-1 per cent), mirroring its performance in October,” WTO said.
The WTO statistics explained that financial services and computer services respectively sustained Luxembourg’s and Pakistan’s export growth.”
The WTO said prospects for recovery remain poor since a second wave of COVID-19 infections necessitated new, stricter lockdown measures in many countries, with tightened restrictions on travel and related services extending into the first quarter of 2021.
The WTO said its latest statistics confirmed earlier expectations that services trade would be harder hit by the pandemic than goods trade, which was only down 5 per cent year-on-year in the third quarter.
“Unlike goods, services cannot be stockpiled, which means that despite pent-up demand, many of the revenue losses from cancelled flights, holidays abroad, restaurant meals, and cultural/recreational activities are likely to be permanent. Travel remains the most affected service sector, down 68 per cent globally compared with the same period of 2019,” WTO said.
It explained that in the third quarter of 2020, spending by international travelers was down 88 per cent in Latin America and the Caribbean, 80 per cent in both Asia and Africa, 78 per cent in North America, and 55 per cent in Europe.
WTO said the relaxation of travel restrictions in Europe during the summer months produced only a modest rebound in services trade in the third quarter.
Trade in “Other services”, such as construction, recreational, legal, and financial services, WTO said repeated its uneven performance: most sub-sectors contracted, with computer services a notable exception.
“With building projects delayed or postponed in many countries due to the pandemic, global construction exports were down 16 per cent year-on-year, as several Asian exporters saw sharp drops. Audio-visual, artistic and recreational services also saw double-digit declines (-14 per cent), with the United States’ exports down 24 per cent and the United Kingdom’s cut nearly in half (-45 per cent),” WTO said.
The WO said legal, management, accounting, and advertising services saw a tepid year-on-year rebound of one per cent and financial services increased by two per cent globally, with exporters in different regions recording positive growth.
This, the international trade organisation said, included the European Union, whose financial services exports were up four per cent year-on-year and computer services remained the most dynamic sector in the third quarter, up nine per cent due to increasing global demand for cloud computing, platforms and virtual workplaces.
BY KINGSLEY ASARE