The United Nations Conference on Trade and Development (UNCTAD) has said the value of global trade in 2021 reached a record level of $28.5 trillion.
It said the global trade volume in the year gone by was an increase of 25 percent on 2020, and 13 percent higher compared to 2019, before the Covid-19 pandemic struck.
The UNCTAD’s Global Trade Update, published on February 17, said all major trading economies saw imports and exports rise above pre-pandemic levels in the fourth quarter of 2021.
It added that trade in goods increased more strongly in the developing world than in developed countries.
The report also showed that world trade in goods remained strong in 2021, and trade in services finally returned to its pre-Covid-19 levels.
While most global trade growth took hold during the first half of 2021, progress continued in the year’s second half.
After a relatively slow third quarter, trade growth picked up again in the fourth quarter, when trade in goods increased by almost $200 billion, achieving a new record of $5.8 trillion.
Meanwhile, trade in services rose by $50 billion to reach $1.6 trillion, just above pre-pandemic levels.
The report shows that in the fourth quarter 2021, all major trading economies saw imports and exports rise well above pre-pandemic levels in 2019.
But trade in goods increased more strongly in the developing world than in developed countries.
Exports of developing countries were about 30 percent higher than during the same period in 2020, compared with 15 percent for wealthier nations.
The growth was higher in commodity-exporting regions, as commodity prices increased. Moreover, South-South trade growth was above the global average, with a 32 percent year-on-year increase.
Except transport equipment, all economic sectors saw a substantial year-over-year increase in the value of their trade during the final quarter of 2021.
“High fuel prices are behind the strong increase in the value of trade of the energy sector,” said the report says. “Trade growth was also above average for metals and chemicals.”
As a result of the global shortage of semiconductors, trade growth in communication equipment, road vehicles and precision instruments was subdued.
The UNCTAD report indicated that trade growth would slow during the first quarter of 2022.
Positive growth rates are expected for both trade in goods and services, albeit only marginally, keeping trade values at levels similar to the last three months of 2021.
“The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages,” said the report.
“As these trends are likely to abate, international trade trends are expected to normalize during 2022.”
Trade growth in 2022 is likely to be lower than expected, given the macroeconomic trends.
On trade flows, the report projected the trend of regionalization to increase because of various trade agreements and regional initiatives, as well as “increasing reliance of geographically closer suppliers.”
Moreover, trade patterns in 2022 are expected to reflect the increasing global demand for products that are environmentally sustainable.
The report also flags the record levels of global debt, warning that concerns over debt sustainability are likely to intensify due to mounting inflationary pressures.
“A significant tightening of financial conditions would heighten pressure on the most highly indebted governments, amplifying vulnerabilities and negatively affecting investments and international trade flows,” the report cautions.