World trade recovering quickly from COVID-19 crisis – UNCTAD
Major world economies are recovering quickly from the impact of the 2020 fall as a result of the coronavirus disease (COVID-19) pandemic. According to the United Nations Conference on Trade and Development (UNCTAD)’s Global Trade Update, global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions.
The world trade recovery from the COVID-19 crisis hit a record high in the first quarter of 2021, increasing by 10 per cent year-over-year and 4 per cent quarter-over-quarter.
The report indicates that the impressive rebound in quarter 1, 2021 continued to be driven by the strong export performance of East Asian economies, whose early success in pandemic mitigation allowed them to rebound faster and to capitalize on booming global demand for COVID-19 related products.
Economist Alessandro Nicita, who worked on the report said it took four quarters after the start of the pandemic-induced recession for world trade to return to pre-recession levels. By the fifth quarter – quarter 1, 2021 – global trade was higher than pre-crisis levels, with an increase of about 3 per cent relative to quarter 4, 2019.
By contrast, it took 13 quarters for global trade to recover from the 2015 recession, which resulted from structural changes in East Asian economies and declines in commodity prices, and nine quarters to bounce back from the 2009 recession caused by the global financial crisis.
Even though trade in services remained substantially below averages, trade in goods during the first quarter of 2021 was higher than the pre-pandemic level.
“Global trade in COVID-19-related products remained strong during the quarter,” it says.
According to the report, import and export trends for some of the world’s major trading economies show that trade in major economies recovered from the fall of 2020 with a few exceptions.
The large increases have been attributed to the low base for 2020, and trade in many of the major economies was still below 2019 averages. However, the trend of a stronger recovery for goods relative to services is common to all major economies, the report finds.
It shows that China, India and South Africa fared relatively better than other major economies during quarter 1, 2021. China’s exports registered a strong increase not only from 2020 averages but also in relation to pre-pandemic levels. In contrast, exports from Russia remained well below 2019 averages.
Trade recovery remains uneven especially among developing countries, with exports from East Asia rebounding substantially faster, the report notes.
The report shows that in quarter 1, 2021 the value of exports remained below averages for countries with economies in transition, the Middle East, South Asia and Africa.
It also found that in quarter 1, 2021 the value of merchandise imports and exports of developing countries was substantially higher compared with quarter 1, 2020 and quarter 1, 2019 (by about 16 per cent).
Also, in quarter 1, 2021 trade continued to rebound not only in sectors related to COVID-19, such as pharmaceuticals, communication and office equipment, but also others like minerals and agrifood.
In contrast, the energy sector continued to lag and international trade in transport equipment remained well below averages, the report says.
The report further forecasts that trade will continue growing in 2021, with the growth expected to remain strong in the second half of the year. “Trade growth is expected to remain stronger for East Asia and developed countries, while still lagging for many other countries,” it says.
The overall forecast for 2021 indicates an increase of about 16 per cent from the lowest point of 2020 (19 per cent for goods and 8 per cent for services).
The value of global trade in goods and services is forecast to reach $6.6 trillion in quarter 2, 2021, equivalent to a year-over-year increase of about 31 per cent relative to the lowest point of 2020 and of about 3 per cent relative to the pre-pandemic levels of 2019.
It is uncertain how trade patterns will be shaped throughout the year. “Nevertheless, fiscal stimulus packages, particularly in developed countries, are expected to strongly support the global trade recovery throughout 2021,” the report says. “The value of global trade should also rise due to positive trends across commodity prices.”
By Theodora Aidoo
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