WTO raises trade growth forecasts

Global organisation says goods trade surging past pre-pandemic level

Resurging global economic activity has lifted merchandise trade above its pre-pandemic peak, the World Trade Organisation said yester day 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.

Bullish outlook

“The WTO is now predicting global merchandise trade volume growth of 10.8 per cent in 2021- up from 8.0 per cent forecasted in March — followed by a 4.7 per cent rise in 2022,” up from four per cent 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 long-term 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.

Quarterly trade growth was up 22 per cent year-on-year in the second three months of 2021 but is expected to slow to 6.6 per cent in the final quarter, reflecting 2020’s drop and recovery.

Global gross domestic product is set to grow by 5.3 per cent in 2021 — up from the 5.1 per cent forecasted March — then slow to 4.1 per cent in 2022.