Global trade rebounds more strongly from the COVID-19 pandemic, registering a high record in Q1 of 2021, UNCTAD report reveals.
The value of trade over the period translates into a 10% increase year-on-year and a corresponding 4% quarter-on-quarter.
According to the report, the better-than-expected rebound in Q1 2021 is buoyed by the strong export performance of East Asian economies. This is so, due to the early success in the management of the pandemic, which allowed them to rebound faster and to capitalise on booming global demand for COVID-19 related products.
“Global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions,” said UNCTAD economist Alessandro Nicita.
He further opined that it took four quarters after the start of the pandemic-induced recession for global trade to pick up and mimic pre-pandemic levels. By Q1 2021, global trade was higher than the pre-crisis levels, with an increase of about 3% relative to Q4 2019.
The report shows that in Q1 2021 the value of trade in goods was higher than pre-pandemic level, but trade in services remains substantially below averages.
Accordingly, the report highlights that import and export trends for some of the world’s major trading economies show that with a few exceptions, trade in major economies recovered too.
This notwithstanding, the marked increases result from low base for 2020, and trade in major economies being below 2019 averages.
Recovery uneven across countries
The report notes that, while the recovery to trade is robust, it is widely uneven, especially among developing countries. However, exports from East Asia are rebounding substantially faster.
Furthermore, the report shows that in Q1 of 2021 the value of exports remained below averages for transition economies such as the Middle East, South Asia and Africa. Although South America’s exports increased relative to Q1 2020, they remained below 2019 averages.
The value of merchandise imports and exports of developing countries in Q1 2021 was substantially higher compared with Q1 2020 and Q1 2019 by 16%.
Also, the rebound was not peculiar to COVID-19 related goods, such as pharmaceuticals, communication and office equipment, but also others like minerals and agrifood.
The energy sector continued to lag behind and international trade in transport equipment remained well below averages, the report shows.
That said, trade is expected to continue on this growth trajectory throughout the year, especially for East Asia and developed countries.
Meanwhile, the forecast for 2021 is likely to experience of about 16% from the lowest point of 2020 (19% for goods and 8% for services).
The value of global trade in goods and services is forecast to reach $6.6 trillion in Q2 2021, equivalent to a year-on-year increase of about 31% compared to the lowest point of 2020.
Albeit, the positive outlook hinges on limiting pandemic restrictions, a persisting positive trend in commodity prices. And also includes overall restraints from trade protectionist policies and supportive macroeconomic and fiscal conditions, the report notes.
“Nevertheless, fiscal stimulus packages, particularly in developed countries, are expected to strongly support the global trade recovery throughout 2021,” the report notes. “The value of global trade should also rise due to positive trends across commodity prices.”