Outlook 2022: Global Trade Trends in 2021
Outlook 2022: Global Trade Trends in 2021

Outlook 2022: Global Trade Trends in 2021

Tuesday,
February 15, 2022 / 03:30 AM / by Proshare Research/ Header Image
Credit:  
EcoGraphics

 

On a global scale, trade growth continued in 2021. The
value of global trade in goods increased in each quarter of 2021 although
recovery was more muted for trade in services,
remaining below its
pre-pandemic levels.  Global trade stabilized Q-o-Q growth was still
positive in Q3 2021. The value of global trade in goods and services added
about 1 % to the already high level of the previous quarter. Global trade
growth was about 24 % in Q3 2021, on a year-over-year basis, significantly
higher than pre-pandemic levels, with an increase of about 13% relative to Q3
2019. Valued at about USUS$ 5.6 trillion, the global trade in goods set a new
all-time record in Q3 2021. Trade-in services stood at about USUS$ 1.5
trillion. The quarter-over-quarter growth of trade in goods was about 0.7%,
while that of services was about 2.5%. On a year-on-year basis, the trade
growth rate for goods remains substantially higher than for services (22 % vs 6
%). Both the trend of slower growth for the trade in goods, as well as a more positive
trend for services, will probably continue in Q4 2021. Trade-in goods are
expected to remain constant at about USUS$ 5.6 trillion in Q4 2021, while the
trade-in services will likely continue to slowly recover.

 

A glance at the major trading economies shows that as of  Q3 2021
shows that compared to the average before the pandemic, US Import of Goods rose
by 14% while exports only a managed 7% increase. In the case of Brazil, good
imports rose by 20% while the import of services fell by 25%. China, Japan,
Republic of Korea, Russia, South Africa, and the EU all recorded services
import lower pre-pandemic levels
(see table 2 below).

 

Table 2: Global Trends in Trade
in 2021


 

One major development in the global economy which characterized the
first half of the year 2021 was the Trade war between Australia and
China.  Amidst other reasons, Australia joined the US and other western
powers in criticizing China’s Human rights as well as the manner Beijing
handled the Coronavirus pandemic, calling for an international inquiry into the
origin of the virus. In a swift reaction, China targeted the major exports of Australia
like Sugar, Coal, timber lobster, wine, copper, and Barley with import tariffs.
Australia also responded by curbing the involvement of Huawei in the country’s
5G technology
(see chart 4 below)

 

Chart 4: Australia Finding Alternatives to the Chinese Market

 

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Source: UNCTAD, Proshare Research

 

Meanwhile, despite the imposition of tariffs, the US continued to record
Trade deficits with China in 2021. The world’s largest economy recorded a 9.5%
increase in its trade deficit with China throughout the 11 months to November
2021. Aside from May and June when the US recorded trade deficits of 
US$26.32bn and US$27.84bn with China, the deficits in every month exceeded the
trade deficit recorded in the corresponding months of 2020
(see table 3 below).

 

Table 3: US Trade Deficits with China in 2021

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According to a UNCTAD study published on December 15, a new Asia-Pacific
free trade agreement set to enter into force on January 1, 2022, will create
the world’s largest trading bloc by economic size. The Regional Comprehensive
Economic Partnership (RCEP) brings together 15 East Asian and Pacific countries
of varying economic sizes and stages of development. Australia, Brunei
Darussalam, Cambodia, China, Indonesia, Japan, Republic of Korea, Laos,
Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and
Vietnam are among them. The RCEP will become the world’s largest trade
agreement based on the GDP of its members – nearly one-third of the world’s
GDP. Existing regional trade agreements by share of global GDP include the
South American trade bloc Mercosur (2.4%), Africa’s continental free trade area
(2.9%), the European Union (17.9%), and the United States-Mexico-Canada
agreement (28%) (
see illustration 12 below­).

 

Illustration 12: RCEP compared to existing Trade Agreements

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Downloadable Versions of 2022 Outlook Report (PDF)

1.       Executive Summary: 2021 in the Rearview, 2022 in the Headlamp; Opportunities and Threats in Nigeria’s Pre-election Year – February 12, 2022

2.       Full Report: 2021 in the Rearview, 2022 in the Headlamp; Opportunities and Threats in Nigeria’s Pre-election Year – February 12, 2022

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