UNCTAD on Global Trade in 2021

February 19, 2022

According to UNCTAD’s Global Trade Update published on February 17th, global trade in goods continued strong in 2021, and trade in services finally returned to the levels of pre-COVID-19. Global trade touched $28.5 trillion which is a record level in 2021, according to the research. This shows a 25% increase over 2020 and a 13% increase over 2019 before the COVID-19 pandemic started.

Overview:

While the majority of global trade growth occurred in the first half of 2021, it continued in the second half of the year. After a slow third quarter, trade growth accelerated in the fourth quarter, with goods trade increasing by about USD 200 billion to USD 5.8 trillion. Meanwhile, service trade increased by USD 50 billion to USD1.6 trillion, which is slightly higher than pre-pandemic levels.

What does the report show?

According to the report, imports and exports in all major trade economies rose sharply over pre-pandemic levels in the fourth quarter of 2021. However, goods trade increased more quickly in developing countries than in developed countries.
Exports of underdeveloped countries increased by roughly 30% compared to the same period in 2020, compared to 15% for wealthy nations.
As commodity prices rose, growth was faster in commodity-exporting regions. Also, with a 32 percent year-on-year gain, trade grew faster than the global average.
With the exception of transportation equipment, all economic sectors had significant growth in the value of their trade in the fourth quarter of 2021.
The report stated that high fuel costs are behind the considerable increase in the value of trade in the energy sector, and trade growth for metals and chemicals was also above average.
The global shortage of semiconductors slowed the growth of trade in communication equipment, automobiles, and precision instruments.

Predictions for the year 2022

According to the UNCTAD report, growth in trade will slow down in the first quarter of 2022. Both goods and services trade is expected to grow at a moderately positive rate, keeping trade values at levels similar to the last three months of 2021. International trade trends are expected to normalize throughout 2022. Given the macroeconomic trends, trade growth in 2022 is likely to be lower than expected. The International Monetary Fund has lowered its global economic growth projection by 0.5 percentage points, due to continuing inflation in the United States and concerns over China’s real estate sector. Attempts to reduce supply chains and diversify suppliers could influence global trade patterns during 2022. In 2022, there will be increasing demands for goods that are environmentally sustainable in nature. Also, the report raises concerns over global debt and its likeliness to increase due to increasing levels of inflation.

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