Daily Management Review

WTO improves expectations for recovery growth


World trade is recovering faster than previously expected - after falling by 5.3% in 2020, physical growth could reach 8% this year, according to an updated World Trade Organization (WTO) forecast.

The volume of world trade this year will increase by 8% after a decline of 5.3% in 2020 - this is the new forecast given by the World Trade Organization. Its experts suggest that global trade growth will slow to 4% in 2022 after a recovery surge.

The last October forecast of the WTO expected a 9.2% decline of physical volumes in 2020 and a 7.2% growth in 2021. The organisation now points out that total merchandise exports in monetary terms fell by 8% last year (including a 35% drop in energy trade due to lower oil prices). Services exports shrank even more sharply by 20% (including 63% in tourism).

The decline in total exports peaked in the second quarter, when they decreased by 21% year on year (in the first quarter by 5%). A decline of 6% was observed in the third quarter but an increase of 2% was already recorded in the fourth quarter.

The new forecast assumes global GDP growth of 5.1% in 2021 and 3.8% in 2022 after a 3.8% decline in 2020. In the short term, however, the main risks to trade remain modest growth in services, slow vaccination rates (country-imposed restrictions on medical exports are hampering more mass production) and possible new rounds of restrictions. In the medium term, trade growth may be hampered by rising debt burdens and fiscal deficits - especially in heavily indebted developing countries, WTO experts point out.

The only region where growth of physical volumes of exports was recorded last year was Asia - plus 0.3%. This year the fastest growth is expected there, at 8.4%. Asian imports fell by 1.3% in 2020 and may rise by 5.7% this year. It should be noted that the leading indicators of business activity PMI in China's industry and service sector published on Wednesday indicate an acceleration of economic growth - both indicators increased in March.

source: wto.org