Global trade expected to slow after record $28.5 trillion in 2021 |
Declaring that the value of world trade last year was about $28.5 trillion, the United Nations Conference on Trade and Development (UNCTAD) explained that this represented an increase of nearly 13 percent from pre-pandemic levels in 2019.
“The positive trend in international trade in 2021 was largely the result of rising commodity prices, the easing of pandemic-related restrictions and a strong recovery in demand thanks to economic stimulus packages,” UNCTAD said in a report in the World Trade Bulletin for 2022″.
Notably, the UN body pointed to data showing that trade in services finally returned to pre-pandemic levels in the fourth quarter (Q4) of 2021, while trade in goods remained strong, growing by nearly $200 billion, roughly up to $5.8 trillion. new record.
UNCTAD, which offers technical advice to developing countries to access the globalized economy, also noted that poorer countries’ exports outpaced those of richer countries in the last quarter of 2021 compared to the fourth quarter of 2020 (up 30 percent versus 15 percent).
South-South trade growth was also above the global average in the last quarter of 2021, up about 32 percent from the fourth quarter of 2020 and about 38 percent excluding East Asia.
Regionally, trade growth in the last quarter of 2021 remained very strong in all geographies, according to UNCTAD, although it was lower in Europe, North America and East Asia. Commodity-exporting regions fared better as commodity prices rose.
In terms of the outlook for this year and the reasons why growth is expected to be smaller than in 2021, the UN body said last year’s economic factors are likely to “die down”.
This means “trade growth will continue to slow during the first quarter of 2022” and then “normalize throughout 2022,” UNCTAD said, before pointing to “persistent inflation” in the US and “fears” over China’s real estate sector. .
Global supply chains, one of the key pieces in the global trade puzzle, will also continue to face negative pressures from COVID-19 pandemic, UNCTAD continued.
This is despite efforts by shipping companies to increase reliability and manage risk amid semiconductor shortages and rising energy prices, which have led to supply shortages and a “spiral” increase in the cost of maritime transport.
The structure of world trade may also be affected by a new trade agreement between the countries of East Asia and the Pacific – the Regional Comprehensive Economic Partnership (RCEP).
It entered into force on January 1 this year and could significantly boost trade between members by “diverting trade away from non-member countries,” UNCTAD said, adding that other regional trade initiatives such as the African Continental Free Trade Area could lead to to a similar result.
UNCTAD added that growing demand for commodities that can support greener energy alternatives such as cobalt, lithium and rare earths is also likely to weigh on global trade this year, while heavily indebted governments may will have to make difficult trading choices in case of growth. interest rates force them to pay more to get goods from point A to point B.