Global trade growth remains strong this year amid the pandemic but outlook for 2022 is still “very uncertain” due to a slowing economic recovery and disruptions of logistic networks and increases in shipping costs.
A report of the United Nations Conference on Trade and Development (UNCTAD) said the strong economic recovery of the first half of 2021 slowed down during the second half, with the economic growth of China in the third quarter below expectations and lower than in previous quarters.
“Lower than expected economic growth rates are generally reflected in more downcast global trade trends. Rising commodity prices and inflationary pressures may also negatively affect economic prospects and international trade flows,” the Global Trade Update said.
The report said many economies, including those in the European Union, continue to face coronavirus disease 2019 (Covid-19)-related disruptions.
“These disruptions may negatively affect consumers’ demand and ultimately be reflected in trade statistics for the upcoming quarters,” it added.
The UNCTAD also attributed this year’s outlook to disruptions of logistic networks and increases in shipping costs.
It said the recovery this year has been marked by large and unpredictable swings in demand, which have resulted in an increased stress on supply chains.
“Logistic disruptions and high fuel prices have further contributed to supply shortages and spiraling shipping costs. In particular, the backlogs across major supply chain hubs that have characterized most of 2021 could continue into 2022 and therefore negatively affect trade and reshape trade flows across the world,” the report added.
Other factors cited are global semiconductor shortage, geopolitical factors and the regionalization of trade flows, governmental policies affecting international trade, and debt burdens.
The UNCTAD said global trade is expected to reach about US$28 trillion in 2021, indicating an increase of 23 percent compared to 2020.
“Trade in goods is projected to reach a record level of US$22 trillion in 2021. Trade in services should be valued about US$6 trillion in 2021, still slightly below its pre-pandemic level,” it said.
The report attributed the positive trend for international trade this year mainly to the strong recovery in demand due to subsiding pandemic restrictions, economic stimulus packages, and increases in commodity prices.