Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
New release of GTA Forecasting global trade forecasts - May 2021
02 June 2021Tomasz Brodzicki, Ph.D.
Key observations
The new release of the GTA Forecasting model's results have
been uploaded on Connect; apart from improved forecasting
methodology, we have incorporated new intra-EU trade data, upgraded
the modes of transport factors globally and applied them to
intra-European trade, and included rail and road transport for
intra-EU and extra-EU trade
IHS Markit GTA Forecasting now predicts the real value of
global trade to go up to USD 19,247 billion in 2021 and USD 19,824
billion in 2022
We predict a year-on-year increase in the real value of global
trade by 6.0% in 2021 and 3.0% in 2022. The predicted CAGR for the
period 2021-2030 equals 2.4%, and for 2021-2035 equals 2.3%
We forecast the global merchandise trade volume to grow to 14.7
billion metric tons in 2021 and 15.2 billion metric tons in 2022.
It points to a recovery in the forthcoming years with year-on-year
growth rates of 5.3% in 2021 and 3.1% in 2022
The forecasted CAGR for global trade volume stands now at 2.3%
in the period 2021-30 and 2.2% over 2021-35
IHS Markit forecasts a global recovery in 2021 with
year-on-year real GDP growth rates reaching 5.7% (4.5% in 2022).
The growth rates are predicted to vary between 5.3% (4.1% in 2022)
for advanced, 6.3% (5.2%) for emerging, and 5.0% (4.7%) for
developing states
The adjusted PMI new exports orders (PMI NExO) readouts for the
global manufacturing industry in April 2021 were above the
benchmark value of 50.0 points (54.67, a rise of +1.20 points on
March 2021 readout, and the 3rd month of continuous growth). The
readouts for services are for the first time above of 50.0 points
benchmark since July 2019 and equal to 50.42
Global uncertainty is declining after reaching its historically
highest levels in 2020 but is still high
Our global trade volume growth forecasts for 2021 are more
conservative than projections by other organizations.
GTA Forecasting - new release from May 2021
The new release of the GTA
Forecasting model from May 2021 accommodates the most recent
macroeconomic forecasts, all available by-now historical data for
2020 from the
Global Trade Atlas (GTA) and updated COVID-response
factors.
GTA Forecasting model estimates
a contraction of global merchandise trade in 2020 to USD 18,163
billion or -5.5% year-on-year (it represents a slight
upward adjustment from the values predicted in the February
release).
We now predict the real value of global trade to go up
to USD 19,247 billion in 2021 and USD 19,824 billion in
2022. Therefore, we now predict a year-on-year increase in
the real value of global trade by 6.0% in 2021 and 3.0% in 2022. It
accommodates the recovery in global GDP in 2021 and a particularly
strong growth impulse in the present quarter. The predicted
CAGR for the period 2021-2030 equals 2.4%, and for 2021-2035 equals
2.3%. It represents a downward adjustment in CAGR compared
to the prior release, mostly driven by downward adjustments of GDP
forecasts in the GLM model and qualitative adjustments in our
forecasting methodology (a shift in modeling series with a sideways
trend in the historical data).
In terms of volumes, we estimate a contraction of global
trade in 2020 to 14.0 billion metric tons or by -4.4%
year-on-year.
We forecast the global merchandise trade volume to grow
to 14.7 billion metric tons in 2021 and 15.2 billion metric tons in
2022. It points to a recovery in the forthcoming years with
year-on-year growth rates of 5.3% in 2021 and 3.1% in
2022.
The forecasted CAGR for global trade volume stands at
2.3% in 2021-30 and at 2.2% over 2021-35.
For comparison, the CAGR averaged 3.6% in the period 2000-19 and
an impressive 5.6% in the period 2000-08 preceding the global
financial crisis. The CAGR for the period 2011-19 was 2.1%.
Therefore, the predicted growth rates over 2021-2030(5) are faster
than CAGR over the period 2011-19 predating the pandemic but
significantly lower than the growth rates in trade preceding the
financial crisis.
The estimated contraction in global trade volume in 2020 (-4.4%)
is lower than the contraction in the global financial crisis
(-7.7%).
The estimated recovery is strong enough to allow a trade to
reach its pre-pandemic levels already in 2021 but presently
predicted slower CAGR over the period 2021-2035 is not enough for
global trade to reach the path of the pre-pandemic trend
(2011-2019) within the forecasted time horizon.
The impact of COVID - 19
The reaction in trade in 2020 was consistent with the escalating
global COVID-19 pandemic and steps taken by individual
countries/territories in controlling or mitigating it. The overall
impact of COVID-19 on global trade and the global economy will
depend on the duration, severity, and spatial distribution of the
pandemic and associated severity of containment efforts taken by
individual states.
The cumulative number of confirmed cases of COVID-19
globally by 23 May 2021 reached 166.7 million and 3.45 million
deaths. The cumulative number of cases is currently the largest in
Asia (48.9 million), Europe (46.7 million), North America (38.6
million), and South America (27.6 million); Asia becomes a
global leader in reported cases due to the rapid spread of the
pandemic in India within a month overtaking Europe and North
America.
Looking from the individual country perspective, the cumulative
number of cases is the highest in the US (33.1 million), India
(26.5 million), Brazil (16.0 million), followed by France (6.0
million), Turkey (5.2 million), Russia (4.9 million), the UK (4.5
million), & Italy (4.2 million). Sixteen countries so far have
registered more than 2 million cases of COVID-19 & 28 countries
have registered more than 1 million cases. The top five countries
account for half of the global cases of COVID-19 since the
outbreak, with the US alone accounting for 19.9%, followed by India
with 15.9%.
In April-May 2021, COVID19 was spreading the fastest in
India (14.5 million cases), Brazil (3.3 million cases), the USA
(2.7 million cases), and Turkey (1.9 million cases). The
top 10 countries affected included France, Argentina, Iran,
Columbia, Germany, Italy, and Poland; the highest death toll in
April - May 2021, in turn, was observed in India, Brazil, the USA,
Columbia, and Poland.
The 2-week moving averages of global new cases and deaths
started falling with the vicious variants spreading fast in Brazil
and India; the COVID-19 pandemic is, however, ongoing.
By the end of May 2021, the reported number of
vaccinations globally reached 1.9 billion, with 426 million people
fully vaccinated, which is equivalent to 5.5% of the global
population only.
IHS Markit Growth Scenario
The most recent real GDP growth forecasts from IHS Markit were
published on 18 May 2021. The forecast includes the baseline
scenario of the impact of COVID-19 on the global economy and
individual states.
We now estimate the contraction of global GDP by 3.6% in
2020, varying between -4.6% for advanced, -1.7% for emerging, and
-5.5% for developing economies.
We foresee a global recovery in 2021, with year-on-year real GDP
growth rates predicted to reach 5.7% (4.5% in 2022). The growth
rates are predicted to vary between 5.3% (4.1% in 2022) for
advanced, 6.3% (5.2%) for emerging, and 5.0% (4.7%) for developing
states.
From a quarterly perspective, both Q3 (-1.5%) and Q4 2020
(-0.4%) proved to bring a continuing global recession in 2020. We
predict a global recovery to have taken place already in the Q1 of
2021 (+3.6%), driven mostly by emerging states with the stronger
hike in the current Q2 of 2021 (+10.5%). The predicted growth in Q3
& Q4 2021 is equal to 4.9%.
Recovery in China started in Q2 of 2020 following the COVID-19
related contraction in the first quarter. Apart from China
(+18.7%), four other economies out of the top 10 largest economies
group are now estimated to have grown in real terms in the first
quarter of 2021. These are Brazil (+0.4%), Canada (+0.5%), South
Korea (+1.7%), and the US (+0.4%).
Global Uncertainty
The index of Global Economic Policy Uncertainty (www.policyuncertainty.com/global_monthly.html)
is significantly declining after reaching its historically highest
levels in 2020. The two hikes in 2020 can be associated with two
waves of the COVID-19 pandemic.
PMI New Export Orders readouts point to rising optimism
at least in the short-run
PMI New Export Orders (adjusted) by IHS Markit is a very good
predictor of trade in the coming quarter. The 50.0 points is a
benchmark value with a value above pointing to recovery and below
indicative of contraction. The analyses performed show a
high correlation between PMI NExO and changes in GTA monthly data
reported by states over the coming quarter (mostly the next and the
following month).
The adjusted PMI new exports orders (PMI NExO) readouts
for the global manufacturing industry in April 2021 were above the
benchmark value of 50.0 points (54.67, a rise of +1.20 points on
March 2021 readout, and the 3rd month of continuous
growth).
As can be seen, both PMI NExO for manufacturing and services
suffered a severe downturn, with readouts for March and April 2020
significantly worse than in the 2008-09 global financial crises.
Nonetheless, they followed a V-shape recovery in the latter part of
2020. From September onwards, the PMI for the global manufacturing
trade is above the benchmark value. The readouts for
services are for the first time above 50.0 points benchmark since
July 2019 and equal to 50.42 (!!!), indicating recovery in global
services.
GTA Forecasting predictions vis-à-vis the forecasts of other
organizations
The recent predictions for global trade volume growth rates
differ between the most recent reports by WTO, IMF, the World Bank
and differ from our forecasts. Due to uncertainty, the other
organizations provided scenarios. To make it simpler in the table,
we compare the baseline scenarios.
With the inclusion of new historical data, we now
estimate the contraction of global trade volumes in 2020 to be much
shallower than initially expected (mainly due to steeper recovery
in the second half of the year and quicker than priorly expected
development of the vaccines) and equal to -4.4% (WTO estimates it
at -5.3%).
As to the prospects for global trade volumes in 2021 and
2022, we now predict it at 5.5% and 3.5% and then moderate growth
below the pre-pandemic trend of 2.3%.
WTO predicts higher growth rates at 8.0% in 2021 and 4.0% in
2022 in the baseline scenario, with predictions varying between
+10.5% in the upside scenario to +6.0% in the downside scenario.
Our predictions are thus more conservative.
IMF predicts the volume to go up similarly to WTO baseline
scenario 7.9% for advanced states in 2021 and be higher in 2022 -
6.4% for advanced and 6.0% for emerging states.
World Bank's baseline scenario is the closest to our new
forecasts, with trade volume going up by 5.1% in 2021 and 2022
(+7.0%) in the upside scenarios.
Thus, our global trade volume growth forecast for 2021
is more conservative than projections by other organizations.
Taking into account the still high global uncertainty, the
forecasts should be treated with caution.
This column is based on IHS Markit Maritime & Trade GTA
Forecasting (new May release of our database & model), other
resources of IHS Markit (e.g., PMI, ECR's Comparative World
Overview, GLM), as well as external resources.