IATA International Air Transport Association : What do the new GDP and trade forecasts suggest for air cargo

IATA Economics' Chart of the Week

09 October 2020

What do the new GDP and trade forecasts suggest for air cargo?

		GDP GROWTH FORECASTS,%					TRADE GROWTH FORECASTS,%
					Apr-20			Oct-20	24.0
							21.3
			7.4	4.9						7.2
			5.9
	-2.5
-8.8-4.8					-12.9-9.2
										Uncertainty
										band
							-31.9
2020	2021		2020		2021

Source: World Trade Organization

• This week the World Trade Organisation released its latest outlook for the global economy and international merchandise trade. On these estimates, the global economy is forecast to contract by almost 5% this year, rebounding by a similar magnitude next year. For trade, a fall of 9.2% this year is an upwards revision to even the optimistic scenario from April. However, the anticipated recovery in 2021 has been downgraded to 7.2%.
• Following a sharp recession the rebound in international trade is typically quite strong. But on this occasion, the WTO note that their latest forecast will see trade volumes remaining 'well-below' the pre-crisis trend. There are a number of reasons why this might be the case, including the adverse impacts of the pandemic on employment and incomes, policy responses which have imposed additional debt and supply-side constraints on economies, and the possibility of ongoing international trade tensions. The risks to the outlook are still considered to be firmly to the downside.
• Developments in world trade are an important consideration for the air cargo outlook. During a period of economic recovery, air cargo typically recovers more quickly than other modes of transport, as businesses seek to rapidly re-stock their inventory levels in response to the pick-up in demand. The more subdued recovery now expected in international trade highlights the risk that the forecast rebound in air cargo volumes might also be slower on this occasion.

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