global goods trade: WTO ups ‘21 goods trade growth forecast to 10.8%

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The World Trade Organization on Monday revised up its forecast for global goods trade growth in 2021 to 10.8%, up from 8% it had projected in March and also said it expects merchandise trade to grow 4.7% in 2022.

Supply-side issues such as semiconductor scarcity and port backlogs may strain supply chains and weigh on trade in particular areas, but are unlikely to have large impacts on global aggregates, it said.

“The current forecast is close to the upside scenario shown in the last trade forecast, but downside risks now predominate, including strained global supply chains and Covid-19 outbreaks,” the WTO said in a statement.

As per the statement, while global trade rebound beats expectations but marked by regional divergences remain large. Imports of Asia in 2021 are expected to rise 9.4% compared to 2019, while imports of Least-Developed Countries (LDCs) will fall 1.6%.

WTO Director-General Ngozi Okonjo-Iweala said that inequitable access to vaccines is exacerbating economic divergence across regions and asked the members to come together and agree on “a strong WTO response to the pandemic” which would provide a foundation for more rapid vaccine production and equitable distribution.

Emphasising that this is necessary to sustain the global economic recovery as Vaccine policy is economic policy and trade policy especially ahead of the 12th Ministerial Conference of the WTO, she said: “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 Geneva-based organisation said that due to a lower base, year-on-year growth in the second quarter of 2021 was 22%, but the figure is projected to fall to 10.9% in the third quarter and 6.6% in the fourth quarter, in part because of the rapid recovery in trade in the last two quarters of 2020.

“Reaching the forecast for 2021 only requires quarter-on-quarter growth to average 0.8% per quarter in the second half of this year, equivalent to an annualized rate of 3.1%,” it said.

The forecast projects export volume growth in 2021 will be 8.7% in North America, 7.2% in South America, 9.7% in Europe, 0.6% in the CIS, 7.0% in Africa, 5.0% in the Middle East and 14.4% for Asia. Imports in the same year are set to grow by 12.6% in North America, 19.9% in South America, 9.1% in Europe, 13.1% in CIS, 11.3% in Africa, 9.3% in the Middle East and 10.7% in Asia. Exports and imports of LDCs will increase by an estimated 5.3% and 5.5%, respectively, in 2021.

Services trade is likely to lag behind goods trade, particularly in sectors related to travel and leisure, according to the WTO report.

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