Global merchandise trade reaches new heights
Goods exports: Asia rebounds first
Global trade in goods by volume exceeded pre-Covid-19 levels during the winter months, marking over the 6-month period the decline reported in the first quarter of 2020 (see graph 1). This V-shaped recovery underlines the uniqueness of the current crisis, with demand triggering a major catching-up movement and an industrial fabric that is more resilient than in previous crises. Following the 2008 global financial crisis, it took three years for world merchandise trade to return to its pre-crisis level. Moreover, despite the sharp slowdown in the first half of 2020, exports fell 5.0% in volume last year, which is lower than the 12.5% drop recorded in 2009.
After hitting a low in May 2020, world exports rebounded by 25% (see Table 1). Yet this solid recovery masks sizeable differences between regions, which are largely due to the delay in the spread of the pandemic between countries. China was the first to isolate itself and curb the pandemic, meaning it was able to restart operations, exports and imports earlier than the rest of the world. In February, European exports and imports were still slightly below year-end 2019 levels. The delay in US exports was even greater (after falling sharply in the first half of 2020), but imports have already exceeded levels of end of year 2019.
Still, in both Europe and the United States, trade volume is expected to exceed pre-crisis levels this spring as the pandemic eases and restrictions are lifted.
For the moment, with Western countries lagging behind China, the ability of Chinese industries to adapt to changes in world demand has enabled China to consolidate its share of the world merchandise export market (cf. Chart 2), to the detriment of industrialized economies, whose export market share has fallen below the 60% threshold. However, this is only a temporary phenomenon. With the acceleration of the US economic recovery this winter and the recovery taking shape in Europe this spring, these countries are doomed to regain market share. It should be noted that Chinese exports as a proportion of world exports had declined between 2015 and the outbreak of the global pandemic, due to structural factors such as rising production costs.
Outlook for the second half of 2021
Globally, trade is logically expected to continue to strengthen through 2021 as vaccination campaigns progress and economic stimulus packages – chief among them the massive US bailout – boost global activity. Several leading indicators strongly correlated with world trade continued to improve in the first quarter of 2021. In April, the world PMI index of export orders rose to 54.7, the highest level since May 2010 (cf. . graph 3). A similar upward trend can also be observed in terms of new export orders to Taiwan (see graph 4). This recovery is also corroborated by the World Trade Organization (WTO): in its latest outlook published in March, the WTO expects world trade to rebound by 8% in 2021, after a contraction of 5.3 % in 2020. That said, there could be a decline in global export trends once the catch-up in demand subsides.