• World merchandise trade was set to plummet by between 13% and 32% in 2020 due to the pandemic;
• A 2021 recovery in trade of around 21;3% to 24% was expected but dependent on the duration of the outbreak and the effectiveness of the government responses;
• Nearly all continents would suffer double-digit declines in trade volumes in 2020, with exports from North America and Asia hit hardest;
• Global GDP was expected to fall by 2,5% in 2020 and rising by 7.4% in 2021.

However, in the TRADE FORECAST released in October 2020[4], the WTO has reviewed the information above and has got to the conclusion that 2020 was not as bad as they previously anticipated. Yet, they were more pessimistic about the recovery in 2021 than they were in April. Indeed, this last TRADE FORECAST has provided the following data:

• World merchandise trade is to fall 9.2% in 2020, as opposed to the estimation that it was set to plummet by between 13% and 32% in 2020;
• The recovery in trade in 2021 is expected to be of around 7.2%, well below the previous estimation of 21.3% made in April, which means that the performance of trade is not assumed to be enough to get back to its pre-pandemic trend;
• Unlike it was predicted in April, the exports decline in Asia was not that bad. Indeed, the trade volume in Asia had the best performance out of all continents. The ones who were hit the hardest were North America (as it was already expected) and Europe, which were the only regions that had a double-digit decline in their exports;
• Global GDP fell more than expected and its estimation was downgraded to fall by 4.8% in 2020, compared to the previously expected decline of 2.5%. The same way, the estimation of the Global GPD to 2021 was also downgraded from rising by 7.4% to a growth of only 4.9%.

According to the WTO, the INTERNATIONAL TRADE was better than expected in 2020 especially due to “the trade growth in COVID-19 related products” and to a strong performance in June and July “as lockdowns were eased and economic activity accelerated”.

Taking into account what was said above, how can we answer the question in the title of this post? That is, INTERNATIONAL TRADE: WHAT TO EXPECT IN 2021?

We must say that, as the WTO already mentioned, there are “signs of rebound from COVID-19”, but everything is still very uncertain because the pandemic has not been controlled yet.

Indeed, the WTO has warned in October that “more negative outcomes are possible if there is a resurgence of COVID-19 in the fourth quarter” and this is currently happening.

Unfortunately, we are witnessing second waves of the pandemic in most countries, which are hitting harder than the first waves even in some places and causing more deaths, new lockdowns and halt of the economic activity worldwide, which are very bad news.

Therefore, we agree with the WTO when it says that trade recovery in 2021 depends a lot on "the evolution of the pandemic and government responses to it" and that it "could be disrupted by the ongoing pandemic's effects".

On the other hand, we must highlight that several vaccines have been already approved by governments and that vaccination against COVID-19 has already started in all continents, which can bring some hope that the disease will be controlled soon.

So, although we are not as optimistic as we would like to be, we still can be hopeful that 2021 will be better than 2020 for INTERNATIONAL TRADE because all data and facts are showing recovery on the horizon, but we must remain cautious until the pandemic is duly tamed.

REFERENCES

[1] https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/ 

[2] https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm#reports

[3] https://www.wto.org/english/news_e/pres20_e/pr855_e.htm#:~:text=World%20merchandise%20trade%20is%20set,effectiveness%20of%20the%20policy%20responses.

[4] https://www.wto.org/english/news_e/pres20_e/pr862_e.htm

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