Global trade hits record US$28.5T in 2021, seen abating this year

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Trade growth more robust in developing countries than in the developed world
  • UNCTAD reports record trade of US$28.5 trillion in 2021 as exports and imports in major economies rise above pre-pandemic levels in last quarter
  • Exports of developing countries were about 30% higher than in the last quarter of 2020, compared with 15% for wealthier nations
  • Except for transport equipment, all economic sectors post a substantial year-on-year increase in trade value in the final quarter of 2021
  • Growth expected to ease starting this first quarter as commodity price-driven international trade abate

Global trade rose above pre-pandemic levels to a record US$28.5 trillion in 2021 on strong last-quarter exports and imports in major trading economies, but is expected to ease this year, the United Nations Conference on Trade and Development said.

UNCTAD, in its “Global Trade Update” released on February 17, said trade in goods stayed strong and was more robust in the developing world than in developed countries. Trade in services returned to pre-COVID-19 levels.

“Overall, the value of global trade reached a record level of US$28.5 trillion in 2021,” the report said. The trade value was 25% higher than in 2020 and 13% stronger than in 2019, before the pandemic began.

The report said the positive trend for international trade last year was largely due to increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages.

“As these trends are likely to abate, international trade trends are expected to normalize during 2022.”

The report said most global trade growth took hold in the first half and continued in the second half, characterized by a relatively slow third quarter.

Trade growth picked up again in the fourth quarter, with trade in goods growing by nearly US$200 billion to a record US$5.8 trillion, UNCTAD said. Trade in services grew by $50 billion to $1.6 trillion, just above pre-pandemic levels.

Exports of developing countries were about 30% higher than in the last quarter of 2020, compared with 15% for wealthier nations.

Commodity-exporting regions posted higher growth driven by a surge in commodity prices. UNCTAD also noted that the South-South trade growth of 32% year on year was above the global average.

The report said that except for transport equipment, all economic sectors saw a substantial year-on-year increase in the value of their trade during the final quarter of 2021. A global shortage of semiconductors led to subdued trade growth in communications equipment, road vehicles and precision instruments.

UNCTAD forecast that trade growth will slow this first quarter. Trade in goods and services is expected to expand only marginally, keeping trade value at fourth-quarter 2021 levels.

Trade growth this year is expected to be lower than expected, given the macroeconomic trends.

On trade flows, the report projects the trend of regionalization to increase because of various trade agreements and regional initiatives, as well as “increasing reliance of geographically closer suppliers.”

Trade patterns this year are expected to reflect increasing global demand for environmentally sustainable goods.