Global trade growth remained strong during 2021, as its value continued to increase through each quarter of 2021, according to a new report by the UN Conference on Trade and Development (UNCTAD). The overall value of global trade reached a record level of about $28.5 trillion in 2021, a rise of 25 per cent and 13 per cent over 2020 and 2019 levels respectively.
Trade growth was not only limited to goods. Trade in services also grew substantially in 2021, to finally reach pre-pandemic levels during the fourth quarter (Q4) of 2021.
While most global trade growth took hold during the first half of 2021, growth continued in the second half of 2021. After a relatively slow Q3, trade growth picked up again in Q4 2021, when the value of global trade increased by about 3 per cent relative to Q3 2021.
Global trade growth remained strong during 2021, as its value continued to increase through each quarter of 2021, according to a new report by the UN Conference on Trade and Development. The overall value of global trade reached a record level of about $28.5 trillion in 2021, a rise of 25 per cent and 13 per cent over 2020 and 2019 levels respectively.
Trade in goods and trade in services followed similar patterns during 2021, with stronger increases during the first half of the year. Trade growth continued to be positive for both goods and services in Q3 2021 and especially in Q4 2021.
During Q4 2021, trade in goods increased by almost $200 billion to reach $5.8 trillion, a new record. During the same period, trade in services rose by about $50 billion to reach about $1.6 trillion, a value just above pre-pandemic levels. On a year-over-year (YoY) basis, trade in goods strongly outperformed trade in services, with increase of about 27 per cent and 17 per cent respectively.
The UNCTAD report indicates that trade growth will continue to slow during Q1 2022. Positive growth rates are expected for both trade in goods and in services, albeit only marginally, keeping trade values at similar levels to Q4 2021.
The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages. As these trends are likely to abate, international trade trends are expected to normalise during 2022.
Overall, the evolution of world trade in 2022 is likely to be affected by many factors, including slower-than-expected economic growth, continuing challenges for global supply chains, trade agreements and regionalisation trends and transition towards a greener global economy.
Trade patterns in 2022 are expected to reflect the increasing global demand for products that are environmentally sustainable. Such patterns may also be supported by government policies regulating the trade of high-carbon products, the UNCTAD report says.
Moreover, global trade patterns could also be influenced by increased demand of strategic commodities required to support greener energy alternatives (e.g., cobalt, lithium, and rare earth metals).
There are rising concerns about debt sustainability as well. Given the record levels of global debt, concerns of debt sustainability are likely to intensify in the incoming quarters due to mounting inflationary pressures.
A significant tightening of financial conditions would heighten pressure on the most highly indebted governments, amplifying vulnerabilities and negatively affecting investments and international trade flows, the report says.
The import and export trends of some of the world’s major trading economies further illustrate the patterns of trade growth during recent quarters. In Q4 2021, trade in goods in all major economies was well above pre-pandemic levels in 2019, for both imports and exports.
In Q4 2021, trade in goods increased more strongly for developing than for developed countries. Exports of developing countries in Q4 2021 were about 30 per cent higher than in Q4 2020. In comparison, this figure is about 15 per cent for developed countries.
Moreover, trade growth between developing countries (South-South) outpaced global trade during Q4 2021, with an increase of about 32 per cent relative to Q4 2020, and with an increase of about 38 per cent when excluding East Asian economies. Similar patterns are found when comparing Q4 2021 with the pre-pandemic levels.
Fibre2Fashion News Desk (DS)