Global trade is showing signs of recovering from the deep pandemic-induced slump, but a full rebound will take longer and may be disrupted by the ongoing effects of COVID-19, the World Trade Organisation (WTO) said on Tuesday. However, it warned of downside risks from a resurgence of infections over the coming months.

The global trade body now estimates a 9.2 per cent drop in the volume of world merchandise for 2020, compared with its forecast in April of a 12.9 per cent drop in trade. Global trade is now forecast to grow by 7.2 per cent in 2021, compared with the previous estimate for a 21.3 per cent expansion. However, that would still remain well below the pre-pandemic level.

Meanwhile, US consumers cut back on their borrowing in August, with credit card use falling for a sixth consecutive month, reflecting caution amid the pandemic-triggered recession.

The Federal Reserve said on Wednesday that total borrowing fell by $7.2 billion after a gain of $14.7bn in July. The decline in August was the first since a $12 billion fall in May when pandemic-driven shutdowns ground the economy to a virtual halt.

Consumer borrowing is closely watched for signals it can send about households’ willingness to take on more debt to support their spending, which accounts for 70 per cent of economic activity in the US. Economists say they expect to see a resumption in credit card growth in the coming months but that the gains will likely be limited.

Finally, German industrial output inched lower in August following three months of relatively strong increases, suggesting the recovery in Europe’s largest economy is starting to lose steam. Figures released by the Federal Statistics Office on Wednesday showed that industrial output fell by 0.2 per cent in August compared to July, after an upwardly revised rise of 1.4 per cent in July and a jump of 9.3 per cent in June. Economists had forecast an increase of 1.5 per cent for August.

Factories produced fewer capital goods and consumer goods, with a particularly steep decline in vehicle production.

“At least part of the fall in car output was due to more companies implementing their summer shutdowns in August this year,” Andrew Kenningham from Capital Economics said.

This report was compiled by Bank of Valletta for general information purposes only.