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Global trade has overall recovered from the COVID-19
crisis with the peak of recovery in Q2 2021, and most of the
sectors
Growth rates in trade are becoming more moderated,
gradually returning to more business-as-usual levels; still, many
disruptions persist in some key Global Value Chains (GVCs) and can
only ease off in 2022 with lower expected overall economy and
global demand growth rates
The adjusted PMI NExO readouts for the global
manufacturing industry in September 2021 point to further growth in
the short-run (51.02) and are above the 50.0 benchmark the 13th
month in a row proving the sustained nature of recovery; however,
they were falling over the last quarter to stabilize in September;
at the same time the readouts for global services are below the
benchmark pointing to stagnation for the 2nd month in a
row
Transport costs are still at very high levels,
adversely affecting global trade flows. It is due to 6-7-year highs
in crude oil and natural gas prices, excessive port congestion in
many parts of the world, and due to COVID-19 related measures taken
by some of the states; the composite index of the costs of freight
by the Shanghai Shipping Exchange exceeded 3300 points (USD/TEU) in
October
The global recovery in 2021 is clear, with year-on-year
real GDP growth rates now predicted to reach 5.5%. The growth rates
are expected to vary between 4.9% (3.8% in 2022) for advanced, 6.5%
(5.0%) for emerging, and 4.3% (5.0%) for developing
states
Real GDP growth rates in Q3 & Q4 are forecasted to
be positive but much more moderated (varying from 2.4 - 7.3% in Q3
and 1.0 - 5.5% in Q4); we are clearly over the top of recovery from
the initial COVID-19 crisis in reported real GDP growth rates,
similarly to data on trade
Changes in Trade of the Top 10 Economies
The data on growth rates point to a sustained recovery
in trade (both exports and imports) among the top 10 economies for
some of the states already in Q4 2020, most of the states in Q1,
and all the states under analysis in Q2 2021 and Q3 for all the
states that reported the data (growth rates in Q3 are on average
lower than in Q2)
Exports are growing in all the top 10 states from March
2021 onwards, with the situation in the first two
months of 2021 more nuanced; imports, in turn, started growing in
all the states a month earlier (Feb 2021) apart from the
UK, which showed negative growth rates both in January and
February
Generally speaking, the growth ratesreported by the top 10 in 2021 are the highest in the
months most adversely affected by the outbreak of the pandemic in
2020, primarily due to the initial strict reactions (mainly January
to May); the growth rates moderate in the later months of Q2 2021,
and this continues in Q3
The highest yoy growth rates were observed in India in April
2021, both in exports (+201.7% yoy) and imports (+166.6% yoy), the
country most adversely affected in April 2020; the base
effect is thus apparent and has to be taken into account
in the correct interpretation of the data
Only three states have already reported data for September 2021
- Brazil (+33.2% yoy in exports), China (2.65.2%) & South Korea
(16.7%); the growth rates are positive but lower than observed in
the preceding months (peak of the recovery), in line with our
earlier expectations; the growth rates are at the same time, are
higher in imports than in exports (except for China) - possibly
indicating better customer expectations and thus more robust
internal demand
The growth rate of Chinese exports in July was the lowest since
the beginning of the year - it picked up, however, in August and
September; the period of elevated growth rates observed in trade
over the strong recovery phase is over, and we enter a period of
moderation
If we compare the nominal value of exports to the last
month preceding the global pandemic (Dec 2019), we see that in
August 2021, all states reported higher export levels than in
December 2019, apart from the UK; among the top 10, China
recovered the fastest, although in relative terms, Brazil, reached
the highest export levels, followed by India
Sectoral perspective
The present section looks at the top 10 economies exports at
the quarterly level at the HS two-digit commodities disaggregation
level. We take into account the Q2 of 2021, Q3 data are not
available yet for all top 10 states; please note that results
differ slightly from the prior report due to data updates by
reporting states
The recovery in the top ten exports in Q2 2021 is
present in nearly all the sectors except for made-up textiles and
edible vegetables (negative yoy growth rates in Q2, the
commodity group seems to behave countercyclically).
The sectors with the highest growth yoy in Q2 2021 were
tin and articles thereof, works of art, collectors' pieces and
antiques, railway or tramway locomotives, rolling stock, track
fixtures, vegetable textile fibers, rawhides, and skins (other than
furskins) and leather as well as vehicles
In most sectors, recovery started already in Q3 2020, and then
the number of recovering sectors increased from quarter to
quarter
Overall, Q4 2020 brought a general recovery (+3.5%
yoy), and Q1 2021 generated the foreseen boost to top 10 exports
(+16.5% yoy), followed by even more impressive growth in Q2 2021
(+42.2% yoy). We expect the growth to be more moderated in yoy
terms in Q3 & Q4 of 2021
Prospects for the Forthcoming Months
COVID-19
The cumulative number of confirmed cases of COVID-19
globally by 24 October 2021 reached 243.7 million (and is likely to
get 250 million cases threshold by November 2021) and 4.9 million
deaths (to put in relative terms, it already surpassed the
total population of Ireland)
The 2-week moving averages of global new cases globally started
to decline by mid-August 2021, with global average death rates
following; the peak of the fourth wave is behind us, and
the number of restrictions is subsiding; thus, the impact on global
trade is weakening
On a positive note, in comparison to prior waves, the
increase in the number of cases seems not to have led to the rise
of a similar magnitude increase in the number of reported deaths;
it could be the strongly awaited impact of the mass vaccination
programs
In a recent news statement, WHO stated that the
COVID-19 pandemic will last well into 2022
The reported number of vaccinations globally reached
6.92 billion with 2.97 billion people fully vaccinated (with two
doses or equivalent one dose), which is equal to 38.1% of the
global population; to bust immunity, an increasing number
of countries, primarily advanced, started to distribute the third
dose mostly among the population aged 50+
PMI new export orders
The adjusted PMI new exports orders (PMI NExO) readouts
for the global manufacturing industry in September 2021 were above
the benchmark value of 50.0 points (51.02) the 13th month in a row
proving the sustained nature of recovery and still pointing to a
positive short-term outlook for global trade; in comparison to
August readouts its was higher by +0.04 only pointing to
stabilization than a turnaround in the negative trend observed over
the prior quarter
The values for September were pointing to a positive short-term
outlook for exports in six out of the top 10 economies with the
highest values once again for the European Union (55.42), the
United States (54.89), Canada (53.79); the values were
below of 50.0 for in UK (49.70), Brazil (48.93), China (47.66) and
once again for Russia (45.15) - 9th month in a row
The readouts for October are by now available for the
US (50.75), the UK (48.70), and Japan (51.00)
PMI NExO in September 2021 for global manufacturing
(51.02) is above of, and for global services is below the 50.0
points benchmark (48.81); PMI NExO for global services fell for the
third month in a row, and the manufacturing PMI NExO stabilized
after falling for a quarter
Transport costs
Transport costs are still at very high levels,
adversely affecting global trade flows. It is due to
6-7-year highs in crude oil and natural gas prices, excessive port
congestion in many parts of the world, and COVID-19 related
measures taken by some of the states
The composite index of freight costs by the Shanghai
Shipping Exchange exceeded 3300 points (USD/TEU), it
started to flatten out or even fall on specific routes; please bear
in mind that it was below 1000 for most of the time from 2015 to
July 2020; the freight costs are unlikely to moderate in the next
quarter
Real GDP forecasts
The most recent real GDP growth forecasts from IHS Markit were
published on 15 October 2021 and are based on the baseline
scenario of the impact of COVID-19 on the global economy and the
presence of increasing once-again GVCs disruptions
The global recovery in 2021 is straightforward, with
year-on-year real GDP growth rates now predicted to reach 5.5%. The
growth rates are expected to vary between 4.9% (3.8% in 2022) for
advanced, 6.5% (5.0%) for emerging, and 4.3% (5.0%) for developing
states; the growth rates are further predicted to moderate to
around 3% in 2026
In comparison to the prior release from September, the growth
prospects have been lowered for advanced economies both in 2021 and
2022 and increased for emerging and developing states
The estimated growth rate in Q1 2021 was 3.4% and varied
between -0.1% for advanced and 8.8% for emerging economies. In Q2
2021, real global GDP is estimated to have grown by 11.6%, with the
growth impulse stronger for advanced (12.5%) than emerging
economies (10.3%). The prospects for Q3 and Q4 are
positive, with growth rates moderating to 4.1% and 5.3% in Q3 9
(4.2% and 3.2% respectively in Q4); starting from Q2 2022, growth
in emerging states should start on a continuous basis exceed the
growth in the group of advanced states
This column is based on IHS Markit Maritime & Trade
Global Trade Atlas (GTA) & GTAS Forecasting data.
For more details about GTAS Forecasting, please visit
the product page
The full version of this article is available on the
Connect platform for IHS Markit clients with a subscription to
GTA/GTA Forecasting or GTAS Suite.
*Please note that China (mainland) reported an
aggregated trade value for January-February 2020 - for the year
2020, the data in the GTA database were equally split between the
two months. Brazil has revised data for 2020 affecting the reported
growth rates.
