Global trade is recovering strongly after a pandemic-induced downturn in 2020, but progress is uneven, with the UK, Africa and the Middle East among those lagging behind, a major UN report finds.
In its annual trade and development report, published today, the UN Conference on Trade and Development (UNCTAD) says the global economy is expected to bounce back in 2021 after a 5.6% drop in international goods and services trade last year.
UNCTAD estimates that real growth in goods and services will total 9.5% in 2021, with overall global economic growth hitting 5.3% – the highest figure in almost half a century.
“Still, the recovery has been extremely uneven, and scars will continue to weigh on the trade performance in the years ahead,” UNCTAD says.
Though most large economies reported both exports and imports reaching pre-pandemic levels by mid-2021, the report singles out the UK, Africa and Middle East as “lagging” behind. In the UK’s case, the findings are largely attributed to its departure from the EU at the end of 2020.
“Weaknesses mostly resulting from post-referendum uncertainties have severely disrupted trade with the European Union,” the report says.
“In early 2021, lockdown measures, together with the winding-down of a rush to stockpile products ahead of the end of the Brexit transition period in late 2020, led to a second significant collapse of trade flows in less than 12 months.”
Uncertainty over the future trading relationship between the UK and EU wreaked havoc for exporters in the later months of last year.
Public spending watchdogs warned in November that avoidable uncertainties over Brexit preparations meant “significant disruption” was expected at the border from January onwards.
The following month, a major survey of tens of thousands of UK exporters found that a large proportion were shifting exports to non-EU destinations, particularly at the smaller end of the market.
In the case of Africa and the Middle East, UNCTAD says both regions’ export volumes are largely dependent on oil. An agreement reached by OPEC+ in April last year has sharply reduced extraction, resulting in export volumes remaining low – despite positive price effects boosting revenues for major oil exporters.
“Meanwhile, imports of this group have remained extremely flat, mirroring the subdued rebound in economic activities in these countries,” the report adds.
Several Asian countries have recovered strongly from last year’s disruption. In China, where export volumes rebounded sharply from Q2 onwards last year, progress has continued to accelerate.
“During the first half of 2021, China’s monthly trade flows already exceeded their pre-pandemic levels by more than 10%,” UNCTAD says. “Moreover, Chinese imports appear as an outlier as they do not show a strong decline in the first semester of 2020 compared to their historical trend.”
Hong Kong, Taiwan and Vietnam have also seen monthly exports exceed their pre-Covid peak, and the report says volumes “have continued to surge through this year”.
In terms of commodity types, bulk cargo trade volumes remained relatively constant throughout the pandemic and reached an all-time high in late May, driven by strong demand for raw materials.
Container shipping, however, continues to feel the effects of a record surge in freight rates, with trade volumes for the first half of this year nearly 20% lower than in 2017 and 2018.