- Global trade is expected to reach about $28 trillion in 2021, indicating an increase of 11% relative to pre-pandemic levels.
- Global trade growth stabilized during the second half of 2021, increasing by about 1% quarter-over-quarter
- Trade in goods reached record levels in Q3 2021 of about $5.6 trillion
- Trade in services shows increasing momentum but remains below pre-pandemic levels
Global trade is performing strongly this year and expected to reach about US$28 trillion, an increase of 23% over 2020 and up 11% relative to pre-pandemic levels, according to a new United Nations report.
The “Global Trade Update” of the United Nations Conference on Trade and Development (UNCTAD) said the value of global trade in goods continued to increase during each quarter of 2021 and is projected to reach a record level of $22 trillion in 2021.
The recovery has been more muted for trade in services, which remains below its levels of 2019. Trade in services should be valued about $6 trillion in 2021, still slightly below its pre-pandemic level.
The positive trend for international trade in 2021 is largely the result of the strong recovery in demand due to subsiding pandemic restrictions, economic stimulus packages, and increases in commodity prices, said the report.
However, the forecast for 2022 remains very uncertain. UNCTAD has noted the slowing of economic recovery during the second half of 2021, including that of China’s, as well as the rise in commodity prices and inflationary pressures, which may negatively affect economic prospects and international trade flows.
Moreover, logistic disruptions, high fuel prices, supply shortages and spiraling shipping costs have characterized most of 2021 and could continue into 2022 and therefore negatively affect trade and reshape trade flows across the world.
Other factors fueling the uncertainty of the outlook include the global semiconductor shortage, geopolitical tensions, regionalizing of trade flows, governmental policies on trade and rising debt obligations.
Although global trade is stabilizing, quarter-over-quarter trade growth was still positive in the third quarter of this year. The value of global trade in goods and services added about 1% to the already high level of the previous quarter. Global trade growth was about 24% in the third quarter of 2021 year-over-year, significantly higher than pre-pandemic levels, with an increase of about 13% relative to the third quarter of 2019.
Valued at about $5.6 trillion, the global trade in goods set a new all-time record in the third quarter. Trade in services stood at about $1.5 trillion. The trade growth rate for goods remains substantially higher than for services (22% vs 6%). Both the trend of a slower growth for the trade in goods and a more positive trend for services will probably continue in the fourth quarter. Trade in goods is expected to remain constant at about $5.6 trillion in the last quarter, while the trade in services will likely continue to slowly recover.
Overall, in the third quarter, trade flows continued to increase more strongly for developing countries compared to developed countries. While this trend was driven by strong trade growth in East Asian developing economies in previous quarters, it has become broader across developing countries in the third quarter. Furthermore, trade growth in the third quarter has been relatively lower for East Asian economies than for other developing countries.
Trade growth rates in the third quarter were very strong across all geographic regions, although relatively muted in North America, Europe and East Asia, especially when compared to the same period last year. Export growth has been stronger in commodity-exporting regions as commodity prices have increased.
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