THE real value of global trade is set to surge by 7.6% year on year in 2021 and 5.2% year on year in 2022 according to IHS Markit’s Global Trade Atlas Forecasting. This follows an estimated contraction of 13.5% year on year in 2020 to US$16.4 trillion.

The growth this year is attributed to the forecasted recovery in global GDP in 2021 and a particularly strong growth impulse expected in the second quarter. The predicted compound annual growth rate for the real value of global trade for the period of 2021-2030 is 3.5%.

In terms of volumes, IHS Markit estimates a contraction of 11.2% year on year in the global trade in 2020 to 12.7 billion tonnes and forecasts a 7.5% year on year growth in 2021 and a 4.1% year on year increase in 2022.

This will allow the global economy and in particular the transport community to regain momentum and to recoup some of the losses from the trade collapse of 2020. The forecasted CAGR for global trade volume stands at 3.2% in the period of 2021-30.

“The estimated contraction in global trade volume in 2020 (-11.2%) is higher than the contraction in the global financial crisis (-7.7%),” said Dr Tomasz Brodzicki, senior economist at IHS Markit.

“Economic developments will critically depend on the shape of the pandemic curve and the severity of containment efforts taken globally and by individual states as well as the effectiveness of vaccination programs globally.”

Although the COVID-19 vaccines have been developed with unprecedented speed, the effects of vaccination programs are unlikely to be felt globally before Q3 or Q4 of 2021, as larger parts of the population get immunity.

However, many uncertainties still remain and are likely to observe more pronounced adjustments to global value chain/trade patterns (trade diversion effects) the longer the pandemic lasts.

Other important qualitative factors that could affect global trade in 2021 include the side-effects of Brexit, functioning and progress of the Regional Comprehensive Economic Partnership Agreement in participating nations, the new US administration’s trade agenda taking a more multilateral trade policy approach or elections in in countries like Germany resulting of a shifting in power impacting German and EU policies.