The World Trade Organization (WTO) said on Monday that its index of global trade in goods reached a record high. While confirming the strength of the trade recovery, the organization also warned that the COVID-19 pandemic still threatens the prospects for recovery.
The WTO noted that its measure of trade in goods rose to 110.4 points, the highest since it was first published in July 2016, and up more than 20 points from a year earlier.
The rise in trade indicators reflects both the strength of the current trade expansion and the depth of the pandemic shock in 2020, the WTO said on its website. It added that the outlook for world trade remained clouded by downside risks. The WTO noted that the pandemic continues to pose the greatest threat to trade prospects.
In July 2016, the WTO released the Global Trade Sentiment Index for the first time. By collecting trade statistics of major economies, it provides early signals on the current short-term development trend of world trade and provides more timely information on international trade for trade policy makers and the business community. According to the rules of the global Trade in Goods Index, a value of 100 is the base point. A reading of 100 indicates that global trade in goods is growing in line with medium-term trends. An index above 100 indicates that global trade in goods grew more than expected in the quarter, while a reading below 100 indicates that global trade in goods grew less than expected in the quarter.
This strong recovery in global trade is not possible without countries stepping up their "grab" to replenish markets to meet pent-up demand in the context of the gradual lifting of economic blockade measures.
According to research by credit insurance company Yulianyi, the economic boom that has followed the outbreak has led to global companies, notably in the US and Europe, scrambling to shop around the world.
RON Hough, head of Yulia's operations in Germany, Austria and Switzerland, said the buying spree was the most intense in global trade. The United States is ahead of European countries in purchasing goods, in part because its economy reopened early. Companies everywhere are scrambling to fill inventories, but the success of those efforts remains uncertain given the ongoing shortage of supply chains, especially cargo ships, he added. Meanwhile, prices and the cost of global trade are rapidly rising to new highs.
Global trade in goods and services is expected to grow about 7.7% this year, after contracting 8% last year, according to Zuellian economists. Volumes are expected to grow by about 15.9 per cent in 2020, after contracting by 9.9 per cent, as prices rise sharply.
