Global trade to recover faster than expected from Covid crisis – WTO

The World Trade Organization (WTO) has upgraded its outlook for global trade, saying a resurgence of economic activity in the first half of 2021 lifted merchandise trade above its pre-pandemic peak.

The WTO is now predicting a global merchandise trade volume growth of 10.8% in 2021 (up from 8.0% forecasted in March), followed by a 4.7% rise in 2022. Growth should moderate as merchandise trade approaches its pre-pandemic long-run trend, the report said.

According to the WTO, supply-side issues such as semiconductor scarcity and port backlogs may strain supply chains and weigh on trade in particular areas, but they are unlikely to have large impacts on global aggregates. The biggest downside risks come from the pandemic itself, the report said.

“Trade has been a critical tool in combatting the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery,” said Director-General Ngozi Okonjo-Iweala. “But inequitable access to vaccines is exacerbating economic divergence across regions. The longer vaccine inequity is allowed to persist, the greater the chance that even more dangerous variants of Covid-19 will emerge, setting back the health and economic progress we have made to date.”

The WTO forecasts global GDP to grow by 5.3% in 2021, up from 5.1% projected in March. Growth is expected to slow to 4.1% in 2022, up from 3.8% previously.

The report says that, overall, trade recovery continues to vary by region. In particular, the Middle East, South America, and Africa are projected to have the weakest recoveries on the export side, while the Middle East, the Commonwealth of Independent States, and Africa will have the slowest recoveries on the import side.

The report adds that the services trade is likely to lag behind the goods trade, particularly in sectors related to travel and leisure.

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