Global merchandise trade has bounced back in the first quarter of 2021 from its collapse earlier in the pandemic, but the pace of recovery has diverged strongly across countries and regions.
According to trade estimates released by the WTO on Thursday, June 24, 2021, the volume of world merchandise trade grew 2.1% quarter-on-quarter in Q1 2021. Year-on-year growth also picked up to 4.3% in the same period. The WTO noted that it expects a bigger increase in the second quarter due to the steep decline in the same quarter a year ago.
Meanwhile, the current pace of recovery is broadly consistent with the WTO’s most recent forecast on March 31, 2021. In March, the WTO predicted global merchandise trade growth of 8.0% in 2021 and 4.0% in 2022.
Regional differences persist
Regional analyses show that the volume of merchandise exports and imports in the first quarter rose to new heights in Asia and reverted to pre-pandemic levels in Europe and North America. However, it lagged in poorer, less industrialized regions such as Africa and the Middle East.
In the first quarter of 2021, merchandise export volumes were up 21.0% year-on-year in Asia and 1.9% in Europe. They were down slightly in South and Central America by 0.1% and 2.2% in North America. Also, merchandise export volumes were down more substantially in Africa by 4.6% and in the Middle East by 8.4%.
By comparison, merchandise import volumes were up year-on-year in all regions except Africa and the Middle East where import volumes contracted by 0.9 % and 2.7% respectively. Overall, it appears that the trade recovery to date has been strongest in Asia and weakest in regions that export natural resources disproportionately.
Merchandise trade values
Furthermore, Merchandise trade in nominal US dollar terms also rebounded strongly in the first quarter of the year. It went up 14% year-on-year due to a combination of increased quantities and higher prices. The WTO explained that the sharp decline and subsequent rebound since the start of 2020 mostly reflects trends in manufactured goods trade.
Prices of primary commodities fell during the first wave of the pandemic but have since risen steadily, contributing to the upswings in fuels, mining products and agricultural products trade. In May 2021, prices were up 194% year-on-year for fuels, 54% for metals, 45% for food and 26% for agricultural raw materials, according to IMF primary commodity price statistics.
WTO estimates for the first quarter of 2021 show strong year-on-year growth in all main product categories of merchandise trade. Manufactured goods trade was up 16% in the first quarter after having fallen 18% in the second quarter of 2020 at the height of the pandemic. Trade in agricultural products was up 11% in the latest quarter while shipments of fuels and mining products rose 9%.
Also, sub-sectors of manufactured goods showed positive year-on-year export growth in the first quarter. Computers, telecommunications equipment, and integrated circuits all recorded robust year-on-year trade growth of between 25% and 28% in the latest quarter. In contrast, personal items such as footwear, handbags and clothing saw more modest increases of between 4% and 11%. Growth in exports of pharmaceuticals moderated to 8% in the first quarter after having spiked last year.
The WTO warned that inequitable access to COVID-19 vaccines continues to pose the greatest threat to the economic outlook. The trade organization noted that failure to protect all people regardless of income leaves populations vulnerable to further waves of infection. The WTO will release the next forecast update in October.
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