DESPITE seeing double-digit growth for 2021, the global trade outlook for next year is still “very uncertain” due to economic recovery losing momentum and continuing logistic disruptions in pandemic, the United Nations Conference on Trade and Development (Unctad) said.
In its November Global Trade Update, Unctad said the pace of economic recovery slowed down in the second half of the year from the first half, when growth was backed by easing mobility restrictions and stimulus packages, among others.
“In particular, economic growth of China in Q3 [third quarter] 2021 was below expectations and lower than in previous quarters. Lower-than-expected economic growth rates are generally reflected in more downcast global trade trends,” the UN report noted.
“Rising commodity prices and inflationary pressures may also negatively affect economic prospects and international trade flows,” it added.
As for the supply chain concerns, the UN committee noted that the “large and unpredicted swings in demand” amid the recovery this year has resulted in a logistics bottleneck.
Unctad said the logistic disruptions, along with high fuel prices, led to supply shortages and heightened shipping costs.
“In particular, the backlogs across major supply chain hubs that have characterized most of 2021 could continue into 2022 and therefore negatively affect trade and reshape trade flows across the world,” it noted.
The UN group, in an earlier report, warned that consumer prices will likely “significantly” rise in the coming year due to increase in freight rates.
Its analysis points to an 11-percent increase to global import prices between now and 2023 if freight rates remain high. This, as consumer price levels are expected to rise by 1.5 percent in the same period.
The Unctad report also cited the semiconductor shortage as a threat to trade next year, noting that it has affected the automotive sector and other manufacturing industries.
“Since the onset of the Covid-19 pandemic, the semiconductor industry has been facing headwind due to unanticipated surges in demand and persisting supply constraints,” it said. “If persistent, this shortage could continue to negatively affect production and trade in many manufacturing sectors.”
Other factors contributing to a cloudy outlook for trade are government policies affecting international trade and debt burdens, Unctad said.
“The additional borrowing of governments to sustain their economies during the Covid-19 crisis could pose continuous risks of financial instability, especially in the case of global inflationary pressures,” it explained.
For 2021, Unctad sees global trade improving by 23 percent to $28 trillion year-on-year after growth stabilized in the second half.
The global trade in goods and services reached $5.6 trillion and $1.5 trillion, respectively, in the third quarter alone.
Unctad said that trade in goods will have the same level in the fourth quarter but trade in services will “likely continue to slowly recover.”
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