The COVID-19 pandemic has affected the global trade landscape, causing extreme losses for both emerging and developed nations in 2020. Advanced countries experienced a loss of 11% of their income compared to 2019 levels while developing nations experienced a loss of 20%. Luckily, things are beginning to look brighter, with the WTO estimating that world trade will growby 8% in volume in 2021, after falling by 5.3% in 2020.
During the press conference for the 2021 trade forecast, Dr. Ngozi Okonjo‑Iweala, the WTO Director-General, statedthat "ramping up production of vaccines will allow businesses and schools to reopen more quickly and help economies get back on their feet."
The rationale here is that if big pharmaceuticals sped up the production and distribution of vaccines to meet demand, it would add about one percentage point to the global GDP. The volume of merchandise in international trade will grow by about 2.5 percentage points, which could cause exchange to return to pre-pandemic levels by the last quarter of this year.
However, the worst-case scenario is that vaccine production will not meet global demand, or new variants of the virus, which are resistant to vaccines, will emerge. This would cut back a percentage point of global GDP growth and lower trade growth by nearly two percentage points.
Some Pointers That Shows Possible Global Trade Growth
Although the WTO forecasts an 8% increase in global trade, we need to understand that this estimate mainly depends on government measures and the policies they adopt to recover from the rot of the pandemic.
Below are some trade indicators that support the organization's forecast:
Merchandise Export Volume
According to the WTO, in Q2 2020, North America and Europe experienced a sharp year-on-year fall in their export volumes. It went down 25.8% in North America and 20.4% in Europe. However, it recovered by Q4 2020 when the fall had declined to 3% and 2.4% year-on-year.
In Asia, things were better. In Q2 2020, when the pandemic peaked, exports fell 7.2%, but by the fourth quarter, they increased to 7.7%.
Manufacturing Rebounds
Despite fuel and mining products still down by 19% in Q4 2020, trade in manufactured goods was up 6%, in comparison to the previous year. During the same period, trade in agricultural goods went up by a similar amount.
Vaccines, Positive Reports, and Economic Recovery
Lastly, in November 2020, when vaccine development news came out, it sparked hopes and other positive emotions, spurring economic activities.
According to the WTO, "at the height of the pandemic, press reporting increased, and the average tone of articles was mostly negative." However, the tone became much more positive in November, which also added to the rise in positivity.
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