Global trade recovers and even surpasses pre-pandemic levels

Global trade has rebounded to unexpected levels in the first quarter of 2021, surpassing pre-pandemic covid-19 levels, a rebound driven by trade in goods, but not services, which continue to suffer from the effect of the health crisis.

Trade in goods increased in the first three months of this year by 3% over the first quarter of 2019 and it was the sectors related in some way to the pandemic that recorded the best results, according to a study by the United Nations Agency for Trade and Development (UNCTAD).

This entity published today updated data on the progress of global trade, revealing that it increased by 10% in the first quarter, compared to the same period in 2020, and 4% when compared to the fourth quarter of 2019.

Exports from East Asia, particularly China, have been the most reinvigorated, thanks to the speed with which countries in that region controlled the spread of the coronavirus, allowing them to take advantage of the demand that was created around products that had to do with the pandemic right away.

The analysis indicates that recovery has been slower in other regions of the world, although it does not provide specifics.

UNCTAD economists estimate that the recovery will continue in the second quarter of this year and that world trade could close the year with 16% growth, although they acknowledge that there are many uncertainties involved.

Already in the second quarter, it is estimated that the value of global trade, including goods and services, would reach US$6.6 trillion, up 31% from the trough of the same period in 2020 and 3% above pre-pandemic levels.

When compared to a normal period, such as 2019, the highest trade progression between last January and March has been observed in agricultural products (18%) and pharmaceuticals (27%), telecommunications equipment (20%), machinery (19%) and minerals (33%).

The only sector in which the fall has been maintained is that related to transportation, particularly air, with a 34% decline compared to two years earlier and 19% compared to the first part of 2020.

All this largely reflects changes in consumer habits during the pandemic, which led to an increase in demand for healthcare products, digital services, communications and technological equipment for working from home.

With the exception of the transportation industry, which has been hit hard by travel restrictions, UNCTAD believes that there will be an economic recovery this year, largely supported by fiscal stimulus packages in developed countries.

Rising commodity prices will also contribute to an increase in the value of trade this year.

It is clear that the recovery will not have the same strength everywhere and that China and the United States will lead the way, with countries whose economies are integrated with theirs being positively dragged along by the former.

This will be the case for East Asian countries, Mexico and Canada, says UNCTAD.

Its experts assume that governments will make use of all possible public policies to stimulate the recovery of their economies, but considering the current political frictions between several trading powers, they believe that this could be reflected in trade restrictive measures.

Another risk identified is that the massive borrowing that countries have had to resort to in order to sustain their economies during the pandemic could result in financial instability.

It is warned that any increase in interest rates would increase pressure on public and private borrowing, and would have negative repercussions on investment and international trade flows.

This would be particularly true for developing countries, which have very limited fiscal room for maneuver.

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