World merchandise trade shows recovery in 2021

World merchandise trade continued to recover in 2021 following a steep but brief pandemic-induced drop in the second quarter of last year.

According to the World Trade Organization (WTO) Goods Trade Barometer, the current reading of 109.7 is nearly 10 points above the baseline value of 100 for the index and up 21.6 points year-on-year. This reflects both the strength of the current recovery and the depth of the Covid-19 shock last year.

The WTO highlights that in the latest month, all of the barometer’s component indices were above trend and rising – highlighting the broad-based nature of the recovery and signalling an accelerating pace of trade expansion.

Among the component indices, the biggest gains were seen in export orders (114.8), air freight (111.1) and electronic components (115.2), all of which are highly predictive of near-term trade developments.

The latest barometer reading is broadly in line with the WTO’s current trade forecast issued in March. This predicted an 8% pickup in the volume of world merchandise trade in 2021 following a 5.3% decline the previous year. The relatively positive short-term outlook for trade is marred by regional disparities, continued weakness in services trade and lagging vaccination timetables, particularly in poor countries.

Global trade has been recovering since the second quarter of 2020, when the spread of the pandemic prompted lockdowns in many countries and triggered a steep drop in world trade.

The volume of merchandise trade was down 15.5% year-on-year in the second quarter, when lockdowns were in full effect, but by the fourth quarter trade had surpassed the level of the same period in 2019.