Global gross domestic product and world merchandise trade volumes are forecast to grow strongly, says the World Trade Organization in its latest bulletin. Economic activity has come roaring back as merchandise trade has been lifted above pre-pandemic levels. Economists are scrabbling to update their spreadsheets.
“Trade has been a critical tool in combatting the pandemic, and this strong growth underscores how important trade will be in underpinning the global economic recovery,” WTO Director-General Ngozi Okonjo-Iweala said.
World merchandise trade (i.e. goods that cross borders and which are intended for sale) is expected to grow 10.8% this year, the WTO says, which is an upwards revision from the 8.0% forecast in March this year. Quarterly trade growth was up by an astonishing 22.0%. Global GDP will grow by 5.3%, which is a marginal increase from forecasts earlier this year.
However, later this year, and next year, growth is forecast to moderate as merchandise trade approaches its pre-pandemic long-run trend. The WTO notes the presence of downside risks such as strained global supply chains and COVID-19 outbreaks.
“Port backlogs may strain supply chains and weigh on trade in particular areas,” the WTO reported.
The driving forces for the annual growth rates for merchandise trade were, according to the WTO, a reflection of the previous years’ slump, which bottomed out in the second quarter of 2020. Trade and GDP growth have been spurred on by strong monetary and fiscal support and by the resumption of economic activities in countries that have high COVID-19 vaccination rates.
Shipping Australia CEO, Melwyn Noronha commented: “ocean shipping is the backbone of international trade. It is also the backbone of Australia’s international trade as 99.92% of all of our goods and commodities are imported or exported by sea. As the WTO graphs clearly demonstrate, there was a fall in merchandise trade and then there was a rebound in merchandise trade. There’s a word that accurately describes this situation and that word is “resilient”.
“International trade is clearly resilient. As so much of our trade is handled by ships, it logically follows that, despite all the propaganda by self-interested and ill-informed parties earlier this year, shipping is highly resilient too.
“Once again, shipping has delivered the goods.
“The evidence is before your eyes in the WTO’s graphs“.