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Global trade has bounced back to pre-pandemic levels and recorded a 10% jump in the first quarter of 2021 compared with the same period a year earlier, reports the UN Conference on Trade and Development (UNCTAD).

In the first three months of the year, trade was about 3% higher than the last quarter of 2019 – just before the crisis took hold.

The rebound has largely been driven by the continued strong export performance of economies in East Asia. Early success in pandemic mitigation enabled markets in the region to bounce back faster and capitalise on rising global demand for Covid-19-related products such as face masks.

While the report states that the value of goods trade in Q1 2021 was higher than before the coronavirus crisis began, trade in services remains below averages.

Tourism and travel are service industries that have been acutely hit by virus mitigation measures, with flights grounded and borders closed to tourists in many countries around the world during various lockdown restrictions.

Despite services still lagging, the overall pace of trade’s recovery has been impressive. “Global trade has recorded a faster recovery from the recession caused by the pandemic than in the last two trade recessions,” says Alessandro Nicita, UNCTAD economist.

He outlines that it took four quarters after the start of the pandemic-triggered recession for world trade to return to pre-recession levels. By contrast, it took 13 quarters for global trade to recover from the 2015 downturn, which resulted from structural changes in East Asian economies and declines in commodity prices, and nine quarters to rebound from the 2009 recession caused by the global financial crisis.

However, trade recovery remains uneven, especially among developing countries. In the first quarter of the year, the value of exports was below pre-crisis levels for countries in the Middle East, South Asia and Africa. South America’s exports had increased relative to Q1 last year, but remained lower than 2019 levels.

“The trade recovery for developing countries becomes much more muted when East Asian economies are excluded and disappears when only exports are considered,” reads the report. “When excluding trade of East Asian developing economies, south-south trade has slightly declined in Q1 2021.”

Developing countries, including in East Asia, notched up a 16% increase in exports from the first quarter in 2019 to the same period this year (figure 1). However, when East Asia is excluded from the tally, developing nations recorded just 1% growth compared with last year and a decline of 2% on Q1 2019 export figures.

 

Figure 1: First quarter trade change in 2021 compared with Q1 2020 and 2019

 

This sluggish bounce back of trade for developing countries may signal further issues and the potential for a two-speed recovery for trade in developing and developed countries.

Sarah Fowler, international economy analyst at Oxford Analytica, tells GTR that there is a “high” risk of such a recovery in trade.

“Although developing economies outperformed their developed counterparts in the first quarter, this was largely due to East Asia’s outperformance and sluggish trade activity in North America and Europe. This is likely to change in the second quarter as the economic recovery is building momentum in Europe and especially the US.

“Meanwhile some developing regions, especially South Asia and parts of Latin America, continue to struggle with high Covid-19 cases and this will hit their trade flows. Developing countries that are reliant on tourism will be especially hard hit as tourism shows no sign of a full recovery anytime soon,” she says.

Developed countries are also ramping up vaccine programmes that will allow them to open up their economies and move forward with a post-Covid recovery.

The UK, Hungary, Canada and the US have vaccinated around 50% of their populations. Some developing countries, including Israel, Bahrain and Chile, have also inoculated a similar proportion of people – Israel has vaccinated more than 60% of its population. But many of the least developed countries (LDCs) that are highly economically and socially vulnerable, for example Mali, Niger and Yemen, are yet to vaccinate even 1% of their populations.

A waiver on Covid-19 vaccine rights has been supported by the US to increase the number of jabs to LDCs. However, the EU and vaccine manufacturers have largely opposed this measure, stating that it will have little impact on supply.

German chancellor Angela Merkel said at a summit in Portugal earlier this month: “I see more risks than opportunities,” adding: “I don’t believe that releasing patents is the solution to provide vaccines for more people.”

Earlier this month, the UN warned that inadequate progress on vaccination in poorer countries is threatening global economic recovery. “Vaccine inequity between countries and regions is posing a significant risk to an already uneven and fragile global recovery,” said Elliott Harris, chief economist at the UN.