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Global trade is expected to grow by 8% this year

Global trade is expected to grow by 8% this year

by:Jerry Zhuang 80 browse Time required for reading:two minutes

According to the WTO, the volume of global merchandise trade is forecast to grow by 8 per cent year on year.

The severe economic impact of the COVID-19 is not over yet, but the World Trade Organization (WTO) is cautiously spreading hope.

"Prospects for a rapid recovery in world trade have improved," was the key sentence in the WTO's annual outlook report, released in Geneva on March 31st.That should be good news for Germany, whose prosperity depends largely on exports of cars, machinery, chemicals and other goods.

WTO Director-General Ngozi Okonjo-Ivira stressed at the remote briefing that the volume of global merchandise trade is expected to grow by 4 percent in 2022, but this will still be below the level before the outbreak of the Coronet crisis.

Vaccines play a key role

WTO economists calculate that global merchandise trade will decline by 5.3 percent in 2020, mainly due to city closures, border closures and factory shutdowns as a result of the outbreak.While that was the sharpest decline in recent years, the decline was not as severe as the WTO had initially feared.

And export figures picked up again in the second half of 2020.WTO economists attribute part of the encouraging momentum to the success of the new coronavirus vaccine, which has boosted business and consumer confidence.

WTO experts are also bullish about the huge fiscal stimulus packages being rolled out by major trading blocs such as the European Union and the United States.

But Okonjo-Ivira, WTO director-general, was clear: "Vaccines are the best stimulus."She called for a rapid and fair global distribution of vaccines.

"As long as there are too many people and countries without adequate vaccine supplies, growth will be curbed," she said.

The WTO chief also warned that, in addition to vaccine shortages, the new variant of novel coronavirus posed a short-term threat to the expected recovery in global trade.

In the medium to long term, the huge debt accumulated to support the national economy may also become a risk, the report said.

Okonjo-Ivira praised WTO members for questioning protectionist measures.She says even members who erected trade barriers in the early days of the outbreak have since removed them.

Vaccine production, Okonjo-Ivira noted in particular, illustrates the importance of open borders in the fight against COVID-19: one well-known vaccine contains 280 ingredients from 19 countries.The WTO will hold consultations with vaccine manufacturers in April on ensuring unimpeded supply chains.

The debt burden remains a matter of caution

According to Russia's Kommersant newspaper on April 1, the WTO said in its updated trade outlook report that global trade is recovering faster than expected, with the total volume of global merchandise trade likely to grow 8 percent this year after falling 5.3 percent last year.Among the risks that stand in the way of this goal, the WTO said, are slower vaccination rates, potential problems from rising debt and high fiscal deficits in developing countries.WTO experts believe growth in global merchandise trade will slow to 4 percent in 2022.

In its outlook released last October, the WTO predicted that global merchandise trade would fall 9.2 per cent in 2020 and grow 7.2 per cent in 2021.Now the WTO points out that the total value of goods exports fell by 8% last year (of which the energy trade fell by 35% because of falling oil prices).Exports of business services fell even more, by 20 per cent (tourism by 63 per cent).

The steepest drop in exports was 21% in the second quarter of last year, followed by a 6% drop in the third quarter and a slight 2% rise in the fourth quarter, the report said.

According to the new outlook, the global economy will shrink by 3.8 percent in 2020 and grow by 5.1 percent in 2021 and 3.8 percent in 2022.Looking ahead, in the short term, the main risks to trade remain the continued weakness of trade in services, the slow pace of vaccination (where national restrictions on the export of medical products hamper the scale up of vaccine production) and the possible implementation of a new round of pandemic control measures.In the medium term, rising debt burdens and budget deficits, particularly in highly indebted developing countries, could hamper trade growth.

Asia saw the fastest growth in exports

Asia was the only region to report positive growth in commodity exports last year (0.3 percent), the report said.

Asia is expected to post one of the world's fastest export growth rates (8.4 percent) this year, the report said.Asian imports fell 1.3 per cent last year and are expected to grow 5.7 per cent this year.

China's manufacturing purchasing managers' index and non-manufacturing business activity index, released on March 31, showed the economy accelerating, with both rising in March.

North American exports fell by 8.5% in 2020 and are expected to grow by 7.7% this year on the back of a massive fiscal stimulus.North American imports, which fell 6.1 percent last year, are expected to grow 11.4 percent this year.

European exports fell by 8% last year and are likely to grow by 8.3% this year.European imports, which fell 7.6% last year, are set to grow 8.4% this year.


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