The resurgence of global economic activity in the first half of 2021 lifted merchandise trade above its pre-pandemic peak, leading the World Trade Organisation (WTO) to upgrade its forecasts for trade in 2021 and 2022.
The WTO is now predicting global merchandise trade volume growth of 10.8 per cent in 2021, up from 8.0 per cent forecasted in March followed by a 4.7 per cent rise in 2022.
Behind the strong overall trade increase, however, there is significant divergence across countries, with some developing regions falling well short of the global average.
“Trade has been a critical tool in combatting the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery,” WTO Director-General Ngozi Okonjo-Iweala said recently.
“As we approach the 12th Ministerial Conference, members must come together and agree on a strong WTO response to the pandemic, which would provide a foundation for more rapid vaccine production and equitable distribution. This is necessary to sustain the global economic recovery. Vaccine policy is economic policy – and trade policy,” she said.
The large annual growth rate for merchandise trade volume in 2021 is mostly a reflection of the previous year’s slump, which bottomed out in the second quarter of 2020.
Due to a lower base, year-on-year growth in the second quarter of 2021 was 22.0 per cent, but the figure is projected to fall to 10.9 per cent in the third quarter and 6.6 per cent in the fourth quarter, in part because of the rapid recovery in trade in the last two quarters of 2020.
Reaching the forecast for 2021 only requires quarter-on-quarter growth to average 0.8 per cent per quarter in the second half of this year, equivalent to an annualised rate of 3.1 per cent.
Trade volume growth is set to be accompanied by market-weighted GDP growth of 5.3 per cent in 2021 and 4.1 per cent in 2022 (revised up from 5.1 per cent and 3.8 per cent previously).
GDP growth has been spurred on by strong monetary and fiscal policy support, and by the resumption of economic activity in countries that have been able to deploy Covid-19 vaccines at scale.
The current trade projections imply that the ratio of trade growth to GDP growth will rise to 2.0:1 in 2021 before falling back to 1.1:1 in 2022. If the forecast is realised, this would indicate that the pandemic will not have had a fundamental structural impact on the relationship between world trade and income.
If the current forecast is realised, by the final quarter of 2022 Asia’s merchandise imports will be 14.2 per cent higher than they were in 2019. Over the same period, imports will have risen by 11.9 per cent in North America, 10.8 per cent in South and Central America, 9.4 per cent in Europe, 8.2 per cent in Africa, 5.7 per cent in the Commonwealth of Independent States (CIS) and 5.4 per cent in the Middle East.
Asia’s exports will have grown 18.8 per cent over that period, while all other regions will have recorded more modest increases: North America (8 per cent), Europe (7.8 per cent), CIS (6.2 per cent), South America (4.8 per cent), the Middle East (2.9 per cent) and Africa (1.9 per cent).
The forecast projects export volume growth in 2021 will be 8.7 per cent in North America, 7.2 per cent in South America, 9.7 per cent in Europe, 0.6 per cent in the CIS, 7.0 per cent in Africa, 5.0per cent in the Middle East and 14.4 per cent for Asia.
Imports in the same year are set to grow by 12.6 per cent in North America, 19.9 per cent in South America, 9.1 per cent in Europe, 13.1per cent in CIS, 11.3 per cent in Africa, 9.3 per cent in the Middle East and 10.7 per cent in Asia.
Exports and imports of LDCs will increase by an estimated 5.3 per cent and 5.5 per cent in 2021.
Annual trade growth figures for 2021 are to a considerable extent a function of the decline suffered by each region in 2020. The pandemic’s impact on trade is better illustrated by looking at cumulative growth over the two years from 2019 to 2021.
If the second half of this year turns out as expected, world merchandise trade will be up 4.9 per cent compared to 2019. Over that period, export growth will be -0.6 per cent in North America, 2.2 per cent in South America, 1.0 per cent in Europe, -1.0per cent in the CIS, -2.4 per cent in Africa, -7.2 per cent in the Middle East and 14.7 per cent in Asia.
Meanwhile, import growth between 2019 and 2021 will be 5.7 per cent in North America, 8.1 per cent in South America, 0.8 per cent in Europe, 7.5 per cent in the CIS, -1.0 per cent in Africa, -5.9 per cent in the Middle East and 9.4 per cent in Asia. For LDCs, the volume of merchandise exports will increase by 3.2 per cent between 2019 and 2021, while their imports are set to decrease by 1.6 per cent over the same interval.
Source: United News of Bangladesh