As vaccinations surge and lockdowns wane, global supply chains are coming back to life.
Global trade rebounded more than expected from the pandemic as the US and Europe rush to secure containers and goods from Asia, according to recent research.
This year, global trade is expected to grow by 7.7% in volume and 15.9% in value, according to a July report by trade credit insurer Euler Hermes. In 2020, volume declined 8.0% and prices tumbled 9.9%. Analysts expect the upwards trend to continue.
“Global trade growth is expected to remain above pre-crisis trend by 2023. In 2022, we expect growth to reach 6.2% in volume terms and 8.4% in value terms,” says Ana Boata, Head of Macroeconomic Research at Euler Hermes.
The United Nations Conference on Trade and Development (UNCTAD) predicts that global trade will recover from the Covid-19 crisis faster than from the past two recessions, with the 2021 forecast showing a 16% rise from the lowest level of 2020.
“Global demand is likely to remain sustained thanks to the new infrastructure cycle, fiscal stimuli in both the US and Europe, residual savings in the advanced economies and the growing liberalization of trade, even if still modest,” Boata explains.
The World Trade Organization warned that weakness in the services sector and slow vaccination rates in poorer countries could weigh on merchandise trade volume.
“Keeping international markets open will be essential for economies to recover from this crisis, and a rapid, global and equitable vaccine rollout is a prerequisite for the strong and sustained recovery we all need,” WTO Director-General Ngozi Okonjo-Iweala said in the report.
UNCTAD expects an uneven recovery, with China’s export growth exceeding pre-pandemic levels and Russia remaining below 2019 averages in the first quarter of 2021.
Shortages of raw materials and containers are the main reason trade prices are outpacing volumes. “The global race for inputs is supporting trade volumes and, more importantly, pushing prices up,” Euler Hermes economists said. Europe has been forced to pay more for freight as North America rushes to get containers out of Asia.
