WTO Increases Expectations for Global Recovery

The World Trade Organization (WTO) recently published a detailed report indicating an increase in its trade forecasts for 2022. The increase in trade expectations also indicated that in the long-term, the major threat for the global economy will continue to be the pandemic.

“The resurgence of global economic activity in the first half of 2021 sent merchandise trade above its pre-pandemic peak, prompting WTO economists to improve their trade forecasts for 2021 and 2022,” reads the report.

Supply-side constraints, such as semiconductors shortages and port-delays, have strained supply chains and affect trade in certain areas. However, these threats do not represent a major concern for the recovery of the global economy as much as the current state of the pandemic, according to WTO. The organization forecasts a growth in the volume of world merchandise trade of 10.8 percent in 2021, compared to the 8 percent forecast made in March.

Quarterly trade growth increased 22.0 percent year-on-year in 2Q21 but is forecasted to slow to 6.6 percent during 4Q21, reflecting the decline and recovery of 2020. Global GDP will grow 5.3 percent in 2021 according to the same WTO economists, compared to the 5.1 percent previously forecasted in March. Growth would slow to 4.1 percent in 2022, instead of the 3.8 percent previously estimated.

“Mexico’s economic recovery is expected to come from foreign trade because the manufacturing, commerce and transport sectors remain in the lead in matters of economic recovery,” reads a BBVA research report as previously reported by MB. However, other industries such as automotive, fintech and tourism are expected to recover to pre-pandemic levels until 2024. The regional study from BBVA also indicates that the manufacturing industry is expected to grow 15.2 percent at an annual rate, wholesale trade by 13.8 percent and transportation by 13.4 percent.

The WTO Director General Ngozi Okonjo-Iweal highlighted the importance of trade as the world slowly approaches a necessary economic recovery, "Trade has been an essential instrument in combating the pandemic, and this strong growth underscores the importance of trade in underpinning the global economic recovery." However, Okonjo-Iweal raised concerns on the availability of COVID-19 vaccines for different regions, insisting that this issue is creating major economic divisions. The recent spread of new COVID-19 variants is causing major concerns as well, mainly regarding the reach these can have and how they could overshadow the existing economic progress created in 2021