WTO upgrades global trade growth forecast to 10.8% in 2021, 4.7% in 2022

Our Bureau New Delhi | Updated on October 04, 2021

Merchandise trade levels surpass pre-pandemic peak   -

Good news for Indian exporters; biggest downside risk comes from pandemic itself with low vaccinations in poorer countries

The WTO has upgraded its forecast for global merchandise trade volume growth to 10.8 per cent in 2021 and 4.7 per cent in 2022 from the previous predictions of 8 per cent and 4.7 per cent respectively in March this year, spelling more good news for Indian exporters on a high growth track this fiscal.

“The resurgence of global economic activity in the first half of 2021 lifted merchandise trade above its pre-pandemic peak, leading WTO economists to upgrade their forecasts for trade in 2021 and 2022,” per the upgraded forecast released on Monday.

Two-track recovery

The biggest downside risks come from the pandemic itself as only 2.2 per cent of people in low-income countries have received at least one dose of a Covid-19 vaccine, the report pointed out.

“Failure to vaccinate in all countries against Covid-19 has led to a two-track recovery, with slower growth in countries with limited access to vaccines, which are frequently those that had the least fiscal space to support businesses and households,” it said.

This divergence creates space for the emergence and spread of new, potentially vaccine-evading forms of the virus, which could result in the reimposition of health-related controls that reduce economic activity, the report warned.

Also see: Global cotton output seen rising 6%: ICAC

Other irritants are supply-side issues such as semiconductor scarcity and port backlogs that may strain supply chains and weigh on trade in particular areas but are unlikely to have large impacts on global aggregates, the report said.

India’s export volumes

The upgrade in global trade forecast for 2021 and 2022 augurs well for Indian exporters chasing an ambitious export target of $400 billion for FY22 after an over 7 per cent Y-o-Y fall in exports to $291 billion in FY21, attributed mostly to the pandemic.

India’s goods exports in April–September 2021 were at $197.11 billion, an increase of 56.92 per cent over exports in the same period last year, and an increase of 23.84 per cent over April–September 2019.

Trade volume growth is set to be accompanied by market-weighted GDP growth of 5.3 per cent in 2021 and 4.1 per cent in 2022 (revised up from 5.1 per cent and 3.8 per cent previously), according to the report.

Increase in global trade

If all projections, both on trade and economic growth, are met, in the final quarter of 2022, Asia’s merchandise imports will be 14.2 per cent higher than it was in 2019. Over the same period, imports will have risen by 11.9 per cent in North America, 10.8 per cent in South and Central America, 9.4 per cent in Europe, 8.2 per cent in Africa, 5.7 per cent in the Commonwealth of Independent States and 5.4 per cent in West Asia.

Also see: China energy crunch may boost overseas metal producers

Asia’s exports would have grown 18.8 per cent over that period, while all other regions will have recorded more modest increases, the report added.

This means that there could be a substantial growth in demand, not only in India’s traditional export markets such as the US and Europe, but also in newer markets such as South and Central America and Africa.

Published on October 04, 2021

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