WTO upgrades its trade growth forecasts
Talks on IP issue remain in deadlock
GENEVA: Resurging global economic activity has lifted merchandise trade above its pre-pandemic peak, the World Trade Organization (WTO) said on Monday as it upgraded its 2021 and 2022 trade forecasts.
“Supply-side issues such as semiconductor scarcity and port backlogs may strain supply chains, but are unlikely to have large impacts on global aggregates,’’ WTO experts said.
They said the biggest downside risks came from the coronavirus crisis itself, with the strength of the recovery from Covid-19 now dependant upon more equitable access to vaccines, with some countries starved of doses while others offer booster shots.
“The WTO is now predicting global merchandise trade volume growth of 10.8% in 2021 — up from 8% forecast in March — followed by a 4.7% rise in 2022, up from 4% previously,’’ the global trade body said.
The strong annual growth rate for merchandise trade in 2021 is mainly due to the collapse in 2020, when trade bottomed out in the second quarter.
The rate is expected to moderate as merchandise trade returns to the longterm trend it was on before the Covid-19 crisis struck.
“Trade has been a critical tool in combating the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery,” said WTO director-general Ngozi Okonjo-Iweala.
“But inequitable access to vaccines is exacerbating economic divergence across regions,” she added.
While regions with access to Covid19 jabs and sufficient fiscal space are recovering strongly, poorer regions with mostly unvaccinated populations are lagging behind.
“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,” said Okonjo-Iweala.
The Middle East, South America and Africa seem set to have the weakest pandemic recoveries on the export side.
Risks to the WTO forecasts also include inflation spikes, longer port delays and higher shipping rates.
Quarterly trade growth was up 22% year-on-year in the second three months of 2021 but is expected to slow to 6.6% in the final quarter, reflecting 2020’s drop and recovery.
Global gross domestic product is set to grow by 5.3% in 2021 — up from the 5.1% forecasted March — then slow to 4.1% in 2022, up from the 3.8% earlier predicted.
“Service trade is likely to lag behind goods trade, particularly in the sectors related to travel and leisure,’’ said the WTO.
The WTO’s 12th ministerial conference will be held in Geneva from November 30 to December 3.
Okonjo-Iweala urged member states to reach consensus on faster vaccine production and fairer distribution.
The WTO has spent a year wrangling over a proposal from India and South Africa for a temporary waiver on intellectual property rights for vaccines and other anti-Covid tools.
The notion is backed by the World Health Organization (WHO) and many
WTO member states but opposed by pharmaceutical giants and certain European countries.
“We hope to also be able to come to a sensible compromise on the IP issue. That is tough, is not moving as well now, but we hope there will be a pragmatic solution that will be acceptable to both sides,” said Okonjo-Iweala.
The former Nigerian finance and foreign minister also wants to push longblocked trade talks on fishery subsidies across the finish line.
Okonjo-Iweala started her fouryear term in March. She dismissed as “fake news” reports that she was threatening to resign if no progress is made on major logjams at the global trade body.