- Rebound was driven by the strong export performance of East Asian economies, which recovered earlier from the COVID-19 crisis and capitalized on booming demand for COVID-19 related products
- Value of trade in goods was higher in the first quarter of this year than the pre-pandemic level, but trade in services remained substantially below averages
- Trade continued to rebound not only in sectors related to COVID-19, but also in other sectors like those in minerals and agrifood
- Trade will continue growing in 2021, with growth expected to remain strong in the second half of the year
Global trade made a remarkable recovery from the COVID-19 crisis in the first quarter of 2021, increasing by a record high of 10% year-over-year, according to the United Nations Conference on Trade and Development (UNCTAD) in a new report. World trade also grew 4% quarter-over-quarter.
UNCTAD’s “Global Trade Update” said the impressive rebound in the first quarter continued to be driven by the strong export performance of East Asian economies, whose early success in pandemic mitigation allowed them to rebound faster and to capitalize on booming global demand for COVID-19 related products.
“Global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions,” said UNCTAD economist Alessandro Nicita.
He said it took four quarters after the start of the pandemic-induced recession for world trade to return to pre-recession levels. By the fifth quarter—the first quarter of this year—global trade was higher than pre-crisis levels, with an increase of about 3% relative to the fourth quarter of 2019.
By contrast, it took 13 quarters for global trade to recover from the 2015 recession, and nine quarters to bounce back from the 2009 recession caused by the global financial crisis.
The report said the value of trade in goods was higher in the first quarter of this year than the pre-pandemic level, but trade in services remained substantially below averages.
“Global trade in COVID-19-related products remained strong during the quarter,” it said.
With a few exceptions, trade in major economies recovered from the fall of 2020. However, the large increases were due to the low base for 2020, and were still below 2019 averages in many of the major economies was.
The trend of a stronger recovery for goods relative to services was common to all major economies, the report found.
China, India and South Africa fared relatively better than other major economies during the first quarter.
China’s exports, in particular, registered a strong increase not only from 2020 averages but also in relation to pre-pandemic levels. In contrast, exports from Russia remained well below 2019 averages.
Trade recovery remained uneven, the report noted, especially among developing countries, with exports from East Asia rebounding substantially faster.
East Asian economies were also behind the recovery of trade among developing countries (South-South trade). When trade figures from East Asian developing economies are excluded, South-South trade remained below averages.
The report showed that the value of exports remained below averages for countries with economies in transition, the Middle East, South Asia and Africa. Although South America’s exports increased relative to the first quarter of 2020, they remained below 2019 averages.
It found that the value of merchandise imports and exports of developing countries in the first three months of this year was substantially higher compared with the same period in 2020 and in 2019 (by about 16%).
Also, trade in the quarter under review continued to rebound not only in sectors related to COVID-19, such as pharmaceuticals, communication and office equipment, but also others like minerals and agricultural food.
In contrast, the energy sector continued to lag behind and international trade in transport equipment remained well below averages, the report shows.
The report forecasts that trade will continue growing in 2021, with the growth expected to remain strong in the second half of the year.
“Trade growth is expected to remain stronger for East Asia and developed countries, while still lagging for many other countries.”
The overall forecast for 2021 indicates an increase of about 16% from the lowest point of 2020 (19% for goods and 8% for services).
The value of global trade in goods and services is forecast to reach US$6.6 trillion in the second quarter of 2021, equivalent to a year-over-year increase of about 31% relative to the lowest point of 2020 and of about 3% relative to the pre-pandemic levels of 2019.
But the positive outlook is largely dependent on reducing pandemic restrictions, a persisting positive trend in commodity prices, overall restraints from trade protectionist policies and supportive macroeconomic and fiscal conditions, the report said.
UNCTAD said “uncertainty remains about how trade patterns will be shaped throughout the year.”