UN forecasts suggest global trade is undergoing a “frail recovery” after a major slump in Q2, boosted by surging Chinese exports and fresh economic activity in Europe and east Asia.

The UN Conference on Trade and Development (UNCTAD) says the total dollar value of goods trade around the world was 5% lower in Q3 this year compared to the equivalent figure for 2019.

Depending on the effects of the pandemic over the coming months, UNCTAD says it expects the value of global trade to be 7-9% lower in the fourth quarter of 2020 compared to Q4 2019.

Though still “in the red”, researchers say this is a marked improvement from the 19% year-on-year slump in trade recorded between April and June, when Covid-19 containment measures were at their peak.

It also suggests a brighter outlook than annual forecasts published in June, which projected a 20% year-on-year slump in global trade for 2020, and gives hope that the World Trade Organization’s (WTO) worst-case scenario – a 32% fall in global merchandise trade – will be avoided.

“The uncertain course of the pandemic will continue aggravating trade prospects in the coming months,” says UNCTAD secretary general Mukhisa Kituyi. “Despite some ‘green shoots’ we can’t rule out a slowdown in production in certain regions or sudden increases in restrictive policies.”

Researchers partly attribute the improved figures to a remarkable recovery in exports from China, which stabilised in Q2 and then “rebounded strongly”. Year-on-year, exports were up by 7%, 9% and 10% year-on-year for July, August and September, respectively.

“Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period,” UNCTAD says.

A further boost came from economic activities resuming “earlier than expected” in Europe and east Asia, while export growth figures for India and South Korea were also in positive territory in September.

Globally, trade in agri-food, communication equipment and office machinery were all higher in July and August compared to the same two months last year.

Some sectors remain far behind where they were in 2019, however. Energy sector trade values were 35% lower year-on-year in July and August, while automotive trade was down 18% and chemicals down 9% over those months.

Meanwhile, new research by the WTO shows the pandemic caused the steepest contraction in services trade since the 2009 global financial crisis.

Services exports in Q2 this year fell by 32% in North America, 29% in Asia and 26% in Europe, year-on-year, while preliminary WTO estimates suggest a 46% drop in Latin America and the Caribbean, and a 60-65% drop across least-developed countries.

Tourism was hit hard, with restrictions on movement causing internationally travellers’ spending to fall by more than 80%.

Financial services, however, were only marginally affected. The WTO says this emphasises “the very different nature of this crisis from the financial crisis, when exports dropped by 20% in the first quarter of 2009”.

Global foreign direct investment also fell drastically in the first half of 2020, UNCTAD finds. The 49% year-on-year drop “is more drastic than we expected, particularly in developed economies”, says investment and enterprise director James Zhan. “The outlook remains highly uncertain.”