The WTO has forecast the World merchandise trade volume to increase by 8.0% in 2021 after falling 5.3% in 2020. The contraction in 2020 was smaller than previously estimated. However, trade growth will likely slow to 4.0% in 2022. Meanwhile, the WTO expects the total volume of global trade to remain below the pre-pandemic trend. This is according to the latest forecast released by the WTO on Wednesday, March 31, 2021. volume volume volume volume
The recent WTO estimates show that the prospects for a quick recovery in world trade have improved. This is because merchandise trade expanded more rapidly than expected in the second half of last year.
DG calls for open international borders
Meanwhile, the WTO indicated that the relatively positive short-term outlook for global trade is marred by regional disparities, and continued weakness in services trade. This is in addition to lagging vaccination timetables, particularly in poor countries. The global trade organization indicated that COVID-19 continues to pose the greatest threat to the outlook for trade. This is because new waves of infection could easily undermine any hoped-for recovery.
“The strong rebound in global trade since the middle of last year has helped soften the blow of the pandemic for people, businesses, and economies. Keeping international markets open will be essential for economies to recover from this crisis. A rapid, global, and equitable vaccine roll-out is a prerequisite for the strong and sustained recovery we all need. Ramping up production of vaccines will allow businesses and schools to reopen more quickly and help economies get back on their feet”
WTO Director-General Ngozi Okonjo‑Iweala
But DG Okonjo‑Iweala noted that growth will stifle as long as large numbers of people and countries are excluded from sufficient vaccine access. This, according to the DG, will risk reversing the health and economic recovery worldwide.
The Director-General added that trade through value chains has helped countries access food and essential medical supplies during the crisis.
“Manufacturing vaccines requires inputs from many different countries. One leading COVID-19 vaccine includes 280 components sourced from 19 different countries. Trade restrictions make it harder to ramp up production. The WTO has helped keep trade flowing during the crisis. Now, the international community must leverage the power of trade to expand access to life-saving vaccines”.
Merchandise trade volumes in 2020
The impact of the pandemic on merchandise trade volumes differed across regions in 2020. Most regions recorded large declines in both exports and imports. Asia was the sole exception, with export volumes up 0.3% and import volumes down a modest 1.3%. Regions rich in natural resources saw the largest declines in imports. This included Africa (-8.8%), South America (‑9.3%), and the Middle East (-11.3%). The WTO attributed this to reduced export revenues as oil prices fell around 35%. In comparison to other regions, the decline in North American imports was relatively small (-6.1%).
However, in 2021, the WTO expects North America to drive the demand for traded goods by 11.4%. this is due to large fiscal injections in the United States. As such, the WTO expects this to stimulate other economies through the trade channel. Europe and South America will both see import growth of around 8%, while other regions will register smaller increases.
Also, Asia will meet much of the global import demand. Asia’s exports are expected to grow by 8.4% in 2021. European exports will increase nearly as much by 8.3%, while shipments from North America will see a smaller rise (7.7%).
The WTO also forecasts strong export growth in Africa (8.1%) and the Middle East (12.4%). This will, however, depend on travel expenditures picking up over the year. The WTO expects this to strengthen the demand for oil in these regions. Meanwhile, South America will see weaker export growth of 3.2%. Also, the Commonwealth of Independent States (CIS), including certain former and associate Members will see exports growth of 4.4%.
Meanwhile, travel services were down 63% in 2020 and may not fully recover until the pandemic wanes.
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