World goods trade continued on a strong rebound in the third-quarter of 2021, setting a new quarterly record, totaling $5.6 trillion in value, according to UNCTAD.
New projections for the quarter showed that trade in goods and services reached $2.8 trillion, increasing by 23 per cent when compared to the same period in 2020, and 11 per cent during pre-Covid levels.
Despite the record-breaking numbers, the overall performance of global trade masks the uneven recovery in trade across countries and sectors all over the world, UNCTAD said.
“The positive trend for international trade in 2021 is largely the result of the strong recovery in demand due to subsiding pandemic restrictions, economic stimulus packages, and increases in commodity prices.”
UNCTAD
On a sectoral basis, the services sector picked up in line with the overall growth, but trade in services, such as tourism, will remain below pre-pandemic levels at $6 trillion in 2021, UNCTAD said.
Among the manufacturing sectors, trade in energy-related products grew the most, buoyed by high demand for and increases in the price of fossil fuels. Meanwhile, trade was more muted in some sectors affected by the global shortage of semiconductors such as the automotive industry and electronics.
Trade Growth Uneven Regionally
On a regional basis, trade growth also remained uneven in the third quarter of 2021, even though this time around, the regional differences were less pronounced than in the first half of the year.
Trade flows continued to increase more strongly for developing countries in comparison to developed economies, the report says, highlighting that this trend had become more general.
“While this trend was driven by strong trade growth in East Asian developing economies in previous quarters, it has become broader across developing countries in Q3 2021,” UNCTAD said. “Furthermore, in Q3 2021 trade growth has been relatively lower for East Asian economies than for other developing countries.”
The report noted that, for example, India’s trade growth had accelerated in third quarter for both in goods and services, while China’s remained relatively constant, “albeit at already high levels.”
Uncertainties Surround 2022 Outlook
In its November edition of the Global Trade Update, UNCTAD warned that the forecast for 2022 remains very uncertain. Among the factors for this uncertainty, the report cites China’s “below expectations” growth in the third quarter of 2021.
“Lower-than-expected economic growth rates are generally reflected in more downcast global trade trends,” the report noted while pointing to “inflationary pressures” that may also negatively impact national economies and international trade flows.
The report highlighted that “many economies, including those in the European Union” continued to face disruptions associated with the COVID-19 pandemic, and that could continue to affect consumer demand next year, the report stressed.
In addition, the report warned that the large and unpredictable swings in demand that marked 2021 and led to increased stress on supply chains and spiralling shipping costs could continue into the next year.
“In particular, the backlogs across major supply chain hubs that have characterized most of 2021 could continue into 2022 and therefore negatively affect trade and reshape trade flows across the world.”
UNCTAD
The report also stressed that geopolitical factors could play a role in changing trade partners, as regional trade within Africa and within the Asia-Pacific area increase, “diverting trade away from other routes”.
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