The recovery of global trade remains uncertain
Yang Haiquan, our reporter based in Geneva
In 2021, global trade has struggled to recover amidst numerous difficulties, and has shown strong growth momentum and strong resilience from a low starting point hit hard by the epidemic last year.
Looking forward to 2022, although global trade shows the dawn of further growth, it will still face many uncertainties and downside risks.
The recovery of trade in goods is stronger
According to the UNCTAD report, despite continuing to be affected by the epidemic, global trade growth momentum will be strong in 2021 and reach a record high.
It is estimated that the global trade volume will reach approximately 28 trillion U.S. dollars in 2021, an increase of 23% over 2020 and an increase of 11% compared with the level of 2019 before the epidemic.
In 2021, almost all major economies' import and export goods trade will be higher than 2019 levels.
It is estimated that in 2021, global trade in goods will reach a record level of 22 trillion U.S. dollars, and service trade will reach approximately 6 trillion U.S. dollars, slightly lower than the level before the epidemic.
According to a WTO report, global trade in goods will increase by 10.8% in 2021 and will increase by 4.7% in 2022.
The record-high growth in trade in goods reflects the intensity of trade expansion in 2021 and the depth of the epidemic's impact on global trade in the previous year.
The recovery of goods trade in 2021 is stronger than that of service trade, which is a common feature of trade in all major economies.
Services trade in most major economies is still below or close to 2019 levels.
In comparison, the growth of China's trade in goods and services has remained relatively stable and still at a relatively high level.
The positive trend of international trade in 2021 is mainly due to factors such as the strong recovery in demand, the weakening of epidemic restrictions in various countries, the introduction of economic stimulus plans by various countries, and the rise in commodity prices.
As the pandemic crisis continues to disrupt existing supply relationships, global trade continues to play a key role in maintaining countries’ access to goods and services.
Although the epidemic has caused a contraction of international trade flows, the global supply chain can still ensure the cross-border flow of basic medical supplies.
Multiple factors inhibit trade growth
Beginning in the second half of 2021, the once strong global economic recovery slowed down, which in turn caused a corresponding slowdown in the growth momentum of global trade.
In the second half of 2021, the economic growth rate of some major economies was lower than expected. Many economies, including EU countries, continue to be disrupted by the epidemic, coupled with rising commodity prices and inflationary pressures in various countries, which will adversely affect international trade flows. , Which drags down the economic recovery and affects the prosperity of trade growth.
The huge demand brought about by the economic recovery in 2021 has increased the pressure on the global supply chain, and the increase in fuel prices has further exacerbated the shortage of supply and the increase in transportation costs. The shortage of containers and soaring freight rates, poor shipping, port congestion and terminal cargo backlogs have emerged. .
Blocked global supply chains and high transportation costs continue to have a negative impact on global trade.
Since the outbreak, there has been a global shortage of semiconductors.
The semiconductor industry has been facing unfavorable factors such as surge in demand and continued tight supply, which has disrupted the development of many industries, especially the automotive industry, and some important industries will show signs of weakness in 2021.
The trade restriction policies and measures of various countries related to the epidemic affect the liquidity of international trade.
According to WTO data, countries have shown overall restraint in implementing new trade restriction measures related to the epidemic, and these measures are being phased out, but a large number of accumulated and unrepealed restrictions are still affecting trade worth about US$1.5 trillion. Commodities account for nearly 9% of world imports.
Of the 117 export restrictions implemented by various countries after the outbreak, 45 of them still exist, covering medicines, other medical supplies, and personal protective equipment, which affect the response to the epidemic and the production and distribution of vaccines.
Geopolitical factors and regional trade agreements affect global trade patterns.
Geopolitical tensions among some major economies continue to have an important impact on international trade flows.
The implementation of regional trade agreements such as the African Continental Free Trade Area and the Regional Comprehensive Economic Partnership will also affect global trade patterns.
Strengthen multilateral and regional trade cooperation
Global trade in 2022 will face many uncertainties and downside risks.
The WTO report pointed out that, in the medium and long term, today's global economy, which is characterized by a high degree of trade ties, is more vulnerable to natural and man-made disasters.
The interaction of many risks will have a knock-on effect on the economy, trade and social environment.
In the short term, downside risks include regional disparities, continued weakness in service trade, and lagging vaccination rates in some countries, among which the trend of the epidemic is the biggest threat to the prospects of global trade.
In addition, there are still hidden worries about the debt burden.
During the epidemic crisis, governments of various countries increased borrowing in order to maintain the economy. The ensuing rise in interest rates and debt service obligations and global inflationary pressures brought continuous financial instability to many countries, especially developing countries with limited fiscal policy space. Risks, and will adversely affect investment and international trade flows.
Stabilizing the global trading system and promoting more inclusive, diversified and resilient trade will be the development direction of global trade in the future.
The WTO is conducting multilateral negotiations on matters such as fishery subsidies, e-commerce, trade facilitation, services, investment, agriculture and small, medium and micro enterprises.
The revitalization of international cooperation is of great significance to the maintenance of the multilateral trading system.
The WTO believes that some countries should adjust policies aimed at encouraging the return of production and abolishing trade integration, so as to avoid reducing the efficiency of the national economy due to these policies and ultimately pushing up the prices of goods and services.
Given that public debt and fiscal deficits may put pressure on economic growth and trade, countries should adopt prudent fiscal policy measures to maintain economic and financial stability.
Helping developing countries get rid of the chronic disease of commodity dependence is also one of the important tasks in the governance of the global trading system.
Yang Haiquan, our reporter based in Geneva