The value of goods trade surpassed pre-Covid-19 levels during the first quarter of 2021, up 10 per cent year-on-year, and up 4 percent quarter-over-quarter, although services are still a shadow of their pre-pandemic selves, according to new data from UNCTAD released on 19 May.
Exports from East Asian economies have driven this rebound – particularly China, which capitalized on booming global demand for COVID-19 related products. China and India 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-Covid-19 levels, the report said.
East Asian economies are also behind the recovery of trade among developing countries (South-South trade). The report also finds that in Q1 2021 the value of merchandise imports and exports of developing countries was substantially higher compared with Q1 2020 and Q1 2019 (by about 16%).
In contrast,other developing regions and countries have seen trade recover more slowly, the UN economists said. Exports from Russia remained well below 2019 averages.
The report also shows that in Q1 2021 the value of exports remained below averages for countries with 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.
Of note, in Q1 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.
More growth expected in 2021
The report forecasts that the rebound will continue into the second quarter of the year, with the combined value of goods and services reaching $6.6 trillion, equivalent to a year-over-year increase of about 31% relative to the lowest point of 2020 and of about 3% relative to the pre-pandemic levels of 2019, the UN body said, which also predicted that the economies of China and the United States of America will likely be the main drivers of world growth in coming months.
This should also have positive effects on countries which trade with the US and China, such as East Asian countries, Canada and Mexico, said UNCTAD’s Global Trade Update, adding that the COVID-19 crisis is expected to continue disrupting trade in many developing countries “at least throughout 2021”.
The overall forecast for 2021 indicates an increase of about 16% from the lowest point of 2020 (19% for goods and 8% for services).
UNCTAD cautioned that its positive outlook for 2021 was “largely dependent” on countries continuing to subsidise pandemic restrictions. “Nevertheless, the fiscal stimulus packages, particularly in developed countries, are expected to strongly support the global trade recovery throughout 2021,” it said.
Faster rebound than 2009
“Global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions”, said UNCTAD economist Alessandro Nicita, who worked on the report.
He said it took four quarters after the start of the Covid-19-induced recession for world trade to return to pre-recession levels.
It took 13 quarters for world 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. Still, uncertainty remains about how trade patterns will be shaped throughout the year.