|
||
|
TWN
Info Service on WTO and Trade Issues (May21/17) Geneva, 19 May (Kanaga Raja) – The value of global trade in goods and services grew by 4 per cent quarter-over- quarter and by 10 per cent year-over-year in the first quarter of 2021, the United Nations Conference on Trade and Development (UNCTAD) has said. In its latest Global Trade Update released on 19 May, UNCTAD said that the rebound in trade in the first quarter (Q1) of 2021 was driven by the strong export performance of the East Asian economies. According to UNCTAD, global trade is expected to further rebound in the second quarter of 2021. Overall, for 2021, global trade is projected to grow by 16 per cent, but the outlook remains uncertain, it said. According to UNCTAD, amid economic disruptions from COVID-19, on the whole, global trade held up relatively well in 2020. Much of the trade resilience was due to 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, it said. The positive trends from the last few months of 2020 grew stronger in early 2021, it added. In Q1 2021, the value of global trade in goods and services grew by about 4 per cent quarter-over-quarter and by about 10 per cent year-over-year. Importantly, global trade in Q1 2021 was higher than pre-crisis levels, with an increase of about 3 per cent relative to Q1 2019, said the UNCTAD report. The trade rebound of Q1 2021 continues to be driven by the strong export performance of East Asian economies, it added. In Q1 2021, said UNCTAD, the value of trade in goods was higher than pre-pandemic level, but trade in services remains substantially below averages. Furthermore, during Q1 2021, global trade of COVID-19 related products remained strong, UNCTAD added. Looking forward, UNCTAD said that trade is expected to continue growing into 2021. “Trade growth is expected to remain stronger for East Asia and developed countries, while still lagging for many other countries.” The value of global trade in goods and services is forecast to reach US$6.6 trillion in second quarter (Q2) of 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, said UNCTAD. Trade growth is expected to remain strong in the second half of 2021, it added. According to the report, 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). TRADE OUTLOOK FOR 2021 According to the UNCTAD report, the positive outlook for 2021 remains largely dependent on subsiding COVID-19 pandemic restrictions. “Nevertheless, the fiscal stimulus packages, particularly in developed countries, are expected to strongly support the global trade recovery throughout 2021,” it said. “The value of global trade should also rise due to positive trends across commodity prices. Still, there is uncertainty about how trade patterns will be shaped throughout this period,” it added. The UNCTAD report drew attention to several important factors that will characterize global trade during 2021: uneven economic recovery; re-shoring and near-shoring trends; government interventions and policies affecting international trade; macroeconomic instability brought by higher levels of debt; and lasting changes in consumer spending. Some economies are poised to rebound stronger and faster than others, said UNCTAD, adding that the economies of China and the United States of America in particular are expected to be the main drivers of global growth during 2021. “This should also have positive effects on countries whose trade is relatively more integrated with them (e.g. East Asian countries, Canada and Mexico).” On the other hand, UNCTAD said COVID-19 is expected to continue disrupting the economies and trade of many developing countries, at least throughout 2021. The report noted that the COVID-19 pandemic has introduced a substantial uncertainty into the operations of many global value chains, providing incentives to scale down segmentation and shift production closer to consumers. It said the continued development and implementation of regional trade agreements (e.g. Regional Comprehensive Economic Partnership and African Continental Free Trade Area) and the ongoing trade tensions between the major economies could also contribute to changes in production patterns of global value chains. “Moreover, enduring container shortages and increasing freight rates could provide further impetus for re-shoring and near-shoring trends.” According to UNCTAD, governments are expected to use a wide range of policies as part of their post-pandemic recovery plans. Considering the ongoing diplomatic frictions among some of the major economies and the current difficulties within the multilateral trading system, there is the risk that some of these policies may be trade-restrictive, it said. The UNCTAD report added that efforts towards a more socially and environmentally sustainable recovery process could affect the established patterns of global trade. For example, policies aimed to tackle carbon leakages through price adjustments for imports are deemed to have an effect on international trade flows, said the report. UNCTAD also pointed out that the additional borrowing of governments to sustain their economies during the COVID-19 crisis could result in financial instability. “Even without a full-fledged global debt crisis, rising debt and obligations on its servicing could bring instability,” it cautioned. Any rise in interest rates would put pressure on both national and private borrowing with negative repercussions on investments and international trade flows, especially for developing countries whose fiscal policy space is more limited, it added. UNCTAD also noted that consumer behaviour has substantially changed during COVID-19. It said that demand increased in some sectors (e.g. healthcare products, digital services, communication and home office equipment) and declined in some others (e.g. transportation equipment, international travel and hospitality services). “Some of these changes may be enduring, [and] if so, they will be influencing the demand for foreign goods and services,” it said. TRADE TRENDS IN Q1 2021 According to the UNCTAD report, with a few exceptions, trade in major economies recovered from the fall of 2020. However, the large increases are due to the low base for 2020 and trade in many of the major economies was still below 2019 averages, it said. The trend of a stronger recovery for goods relative to services is common to all major economies, UNCTAD noted. China, India, and South Africa have fared relatively better than other major economies during Q1 2021. “China’s exports, in particular, registered a strong increase not only from 2020 averages but also in relation to pre- pandemic levels.” On the other hand, UNCTAD said that exports from the Russian Federation remained well below 2019 averages. Overall, trade continues to rebound more strongly for developing countries relative to developed countries, it added. In Q1 2021, the value of merchandise imports and exports of developing countries is substantially higher compared to Q1 2020 and also to Q1 2019 (by about 16 per cent). However, the trade recovery for developing countries becomes much more muted when East Asian economies are excluded and disappears when only exports are considered. The importance of East Asian economies in explaining the recovery in the trade of developing countries is even more marked when considering trade among developing countries (South-South trade), said UNCTAD. When excluding trade of East Asian developing economies, South-South trade has slightly declined in Q1 2021. The UNCTAD report pointed to varying trade patterns across geographic regions in the first quarter of 2021. It said while imports grew for all the regions, the export rebound was largely confined to East Asian and Pacific economies. The value of exports remained below averages for the Economies in Transition, the Middle East, South Asia and Africa. Although South America’s exports increased relative to Q1 2020, they remained below 2019 averages, it added. UNCTAD also said that during Q1 2021, trade continued to rebound not only in sectors related to COVID-19 (e.g. pharmaceuticals, communication and office equipment) but also increased for most other sectors, such as minerals and agri-food. In contrast, the energy sector continues to lag behind and international trade of transport equipment remains well below averages, it added.
|
||
