The World Trade Organization (WTO) has projected that the global merchandise trade volume will grow 10.8 per cent this year, higher than 8 per cent estimated in March.
Growth should moderate as merchandise trade approaches its pre-pandemic long-run trend and supply-side issues such as semiconductor scarcity and port backlogs may strain supply chains and weigh on trade in particular areas, the WTO said.
"The WTO is now predicting global merchandise trade volume growth of 10.8 per cent in 2021—up from 8 per cent forecasted in March—followed by a 4.7 per cent rise in 2022," it said.
It added that the large annual growth rate for merchandise trade volume in 2021 is mostly a reflection of the previous year''s slump, which bottomed out in the second quarter of 2020.
"Due to a lower base, year-on-year growth in the second quarter of 2021 was 22 per cent, but the figure is projected to fall to 10.9 per cent in the third quarter and 6.6 per cent in the fourth quarter, in part because of the rapid recovery in trade in the last two quarters of 2020," it said.
Reaching the forecast for 2021 only requires quarter-on-quarter growth to average 0.8 per cent per quarter in the second half of this year, equivalent to an annualized rate of 3.1 per cent, it added.
It also said that risks to the forecast remain on the downside, but the relative importance of those risks is difficult to gauge.
"They include spikes in inflation, longer port delays, higher shipping rates, and extended shortages of semiconductors, with supply-side disruptions being exacerbated by the rapid and unexpectedly strong recovery of demand in advanced and many emerging economies," it said.
The pandemic itself presents potentially even bigger risks to world trade and output, particularly if more deadly variants were to emerge, the WTO said adding the highly contagious Delta variant has already prompted governments to reinstate some containment measures.