The World Trade Organization is projecting that the volume of global goods trade will increase by 8.0 percent in 2021 after a 5.3 percent decline in 2020 amid the COVID-19 pandemic. However, the WTO states that this outlook “is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries.” The WTO adds that COVID-19 “continues to pose the greatest threat to the outlook for trade” in the short term, while over the medium to long term “public debt and deficits could also weigh on economic growth and trade.”
The WTO reports that the 5.3 percent decline in goods trade in 2020 was smaller than the 9.2 percent drop anticipated in October 2020. Trade volumes plunged 15 percent year-on-year in the second quarter of 2020 as countries imposed lockdowns and travel restrictions. However, goods shipments surged back to near 2019 levels by the fourth quarter, aided by declining infection rates that lead to an easing of lockdowns, new COVID-19 vaccines that increased business and consumer confidence, and most importantly strong monetary and fiscal policies by many governments that were “much greater in scale and geographic coverage than the response to the 2008-2009 global financial crisis.”
In 2021, the WTO states, demand for traded goods will be driven by North America (11.4 percent) thanks to large fiscal injections in the U.S. Europe and South America will both see import growth of around 8 percent, while other regions will register smaller increases.
Much of global import demand will be met by Asia, exports from which are expected to grow by 8.4 percent. European exports will increase nearly as much (8.3 percent), while shipments from North America will see a smaller rise (7.7 percent). Strong forecasts for export growth in Africa (8.1 percent) and the Middle East (12.4 percent) depend on travel expenditures picking up over the course of the year, which would strengthen demand for oil. Meanwhile, South America will see weaker export growth (3.2 percent), as will the Commonwealth of Independent States, including certain former and associate members (4.4 percent).
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