The COVID-19 crisis has hurt the growth prospects of almost all major industries. The global trade industry is no exception, as demand for international goods has declined significantly in recent months. Since the beginning of 2020, this pandemic has been wreaking havoc on the sector. However, it was predicted near the end of 2020 that the industry would likely recover in 2021. These expectations were based on the fact that several vaccines had been developed around the world, while certain countries had already managed to somewhat control the spread of the virus. Unfortunately, we are now eight months into the new year and still have not seen a complete recovery.
Why the Possibility of a Global Trade Recovery is Getting Farther Away
The international trade industry is still reeling as demand remains low in most parts of the world. This is due to two major reasons. First, a concerning number of countries have been hit by the second and third waves of COVID-19, resulting in large-scale lockdowns and increased border checks. This has inevitably hurt the growth of the trade sector, which is heavily reliant on the free movement of goods across borders.
Secondly, the global vaccination drive has also not been able to meet the targets set by the respective governments. Only a few countries have managed to fully vaccinate even half of their total population. People are therefore remaining skeptical about the virus’s impact and purchasing new products, particularly from unknown overseas markets. As a result, the sound of global trade recovery is becoming increasingly elusive.
However, while trade in services remained significantly below average, trade in goods was, fortunately, higher than pre-pandemic levels in the first quarter of 2021, according to UNCTAD’s Global Trade Update report. But trade recovery still remains uneven, particularly among developing nations, with East Asian exports rebounding significantly faster. The report believes trade will continue to grow throughout the rest of the year, with growth expected to be stronger in the second half. But this is mainly dependent on the removal of pandemic restrictions, the continuation of a positive trend in commodity prices, along with supportive fiscal conditions. Thus, there is still great uncertainty about how trade patterns will evolve throughout the year.
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