Resurging global economic activity has lifted merchandise trade above its pre-pandemic peak, the World Trade Organization said Monday as it upgraded its 2021 and 2022 trade forecasts.
Supply-side issues such as semiconductor scarcity and port backlogs may strain supply chains, but are unlikely to have large impacts on global aggregates, WTO experts said.
They said the biggest downside risks came from the coronavirus crisis itself, with the strength of the recovery from Covid-19 now dependant upon more equitable access to vaccines, with some countries starved of doses while others offer booster shots.
"The WTO is now predicting global merchandise trade volume growth of 10.8 percent in 2021– up from 8.0 percent forecasted in March — followed by a 4.7 percent rise in 2022," up from four percent previously, the global trade body said.
The strong annual growth rate for merchandise trade in 2021 is mainly due to the collapse in 2020, when trade bottomed out in the second quarter.
The rate is expected to moderate as merchandise trade returns to the long-term trend it was on before the Covid-19 crisis struck.
"Trade has been a critical tool in combatting the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery," said WTO director-general Ngozi Okonjo-Iweala.
Jab inequity
"But inequitable access to vaccines is exacerbating economic divergence across regions," she added.
While regions with access to Covid-19 jabs and sufficient fiscal space are recovering strongly, poorer regions with mostly unvaccinated populations are lagging behind.
"The longer vaccine inequity is allowed to persist, the greater the chance that even more dangerous variants of Covid-19 will emerge, setting back the health and economic progress we have made to date," said Okonjo-Iweala.
The Middle East, South America and Africa seem set to have the weakest pandemic recoveries on the export side.
Risks to the WTO forecasts also include inflation spikes, longer port delays and higher shipping rates.
Quarterly trade growth was up 22 percent year-on-year in the second three months of 2021 but is expected to slow to 6.6 percent in the final quarter, reflecting 2020's drop and recovery.
Global gross domestic product is set to grow by 5.3 percent in 2021 — up from the 5.1 percent forecasted March — then slow to 4.1 percent in 2022, up from the 3.8 percent earlier predicted.
Service trade is likely to lag behind goods trade, particularly in the sectors related to travel and leisure, said the WTO.
IP, fisheries deal hopes
The WTO's 12th ministerial conference will be held in Geneva from November 30 to December 3.
Okonjo-Iweala urged member states to reach consensus on faster vaccine production and fairer distribution.
The WTO has spent a year wrangling over a proposal from India and South Africa for a temporary waiver on intellectual property rights for vaccines and other anti-Covid tools.
The notion is backed by the World Health Organization and many WTO member states but opposed by pharmaceutical giants and certain European countries.
"We hope to also be able to come to a sensible compromise on the IP issue. That is tough, is not moving as well now, but we hope there will be a pragmatic solution that will be acceptable to both sides," said Okonjo-Iweala.
The former Nigerian finance and foreign minister also wants to push long-blocked trade talks on fishery subsidies across the finish line.
Okonjo-Iweala started her four-year term in March. She dismissed as "fake news" reports that she was threatening to resign if no progress is made on major logjams at the global trade body.
