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The growth rates in exports reported by the top 10
reached the peak in Q2 and then moderated to lower levels in Q3 in
line with our prior expectations, since May imports are growing
overall stronger than exports
The adjusted PMI new exports orders readouts for the
global manufacturing industry in October 2021 were above the
benchmark value of 50.0 points (50.60) the 14th month in a row
proving the sustained nature of recovery and still pointing to a
positive short-term outlook for global trade
Transport costs are still at very high levels,
adversely affecting global trade flows, but moderated in
comparison to October; supply chain disruptions are going
to persist at least to Q1/Q2 2022
The emergence of the Omicron variant is a major new and
adverse development; the financial markets reacted heavily to its
emergence and the number of states reintroducing stricter
contingency measures is increasing fast and that will impact global
economic activity in Q4 2021/Q1 2022; thus the variant potentially
could become a game-changer
After a 3.4% decline in 2020, world real GDP is now
projected to increase 5.5% in 2021 and 4.2% in 2022 and then
moderate further to 3% by 2026
Changes in Trade of the Top 10 Economies
Exports are growing in all the top 10 states from March
2021 onwards, with the situation in the first two months of 2021
more nuanced; imports, in turn, started growing in all the states a
month earlier (Feb 2021) apart from the UK, which showed
negative growth rates both in January and February and once
again in September
Generally speaking,the growth rates reported by the top
10 reached the peak in Q2 and then moderated to lower levels in
Q3
The highest yoy growth rates were observed in India in April
2021, both in exports (+201.8% yoy) and imports (+169.1% yoy), the
country most adversely affected in April 2020; the base
effect is thus apparent and has to be taken into account
in the correct interpretation of the data
The average growth rate for the top 10 economies
reached its peaks in April 2021 for exports and May 2021 for
imports and are higher for imports ever since which is indicative
of strong internal demand and strong consumer
confidence
Four states have already reported data for October 2021
-Brazil (+27.6% yoy in exports), China (+26.6%), South
Korea (+24.1%), and Japan (only +1.9%); the growth rates are
positive but lower than observed in the preceding months (peak of
the recovery), in line with our earlier expectations
If we compare the nominal value of exports to the last month
preceding the global pandemic (Dec 2019), we see that in September
2021, all states reported higher export levels than in December
2019, apart from the UK; among the top 10, China recovered the
fastest; among countries that reported data for October,
China (mainland) and Brazil still record the highest levels in
relative terms with South Korea catching up
Sectoral perspective
The recovery in the top ten exports in Q2 2021 is
present in nearly all the sectors except for made-up
textiles (negative yoy growth rates in Q2, the commodity
group seems to behave countercyclically)
The sectors with the highest growth yoy in Q2 2021 were
tin and articles thereof, works of art, collectors' pieces and
antiques, railway or tramway locomotives, rolling stock, track
fixtures, vegetable textile fibers, rawhides, and skins (other than
furskins) and leather as well as vehicles
In most sectors, recovery started already in Q3 2020, and then
the number of recovering sectors increased from quarter to
quarter
Overall, Q4 2020 brought a general recovery (+3.5%
yoy), and Q1 2021 generated the foreseen boost to top 10 exports
(+16.5% yoy), followed by even more impressive growth in Q2 2021
(+42.2% yoy). We expect the growth to be more moderated in yoy
terms in Q3 & Q4 of 2021, for Q3 it is likely to be above Q1
results though
The overall impact of COVID-19 on global trade and the
global economy depends on the duration, severity, and uneven
spatial and temporal distribution of the pandemic
(changing with the subsequent waves of the pandemic) and
the associated severity of containment efforts taken by individual
states. The health crises create problems both on the
supply side (e.g., due to lockdowns, forced production stoppages,
disrupted global value chains) and demand-side (e.g., lower
consumer confidence, delayed consumption, lower incomes)
On 26 November 2021, WHO designated a new SARS-Cov-2
variant B.1.1.529 as a variant of concern, named Omicron,
on the advice of WHO's Technical Advisory Group on Virus Evolution.
This decision was based on the evidence that Omicron has several
mutations that may have an impact on the speed of spread, higher
transmitability, or the severity of illness it causes; the
markets reacted strongly to the new adverse information with
increasing number of states reintroducing stricter contingency
measures
The full impact of this new development will be known
only within several weeks when we will understand the severity of
the mutation, nonetheless, it is likely to impact global economic
activity in Q4 2021/Q1 2022; the variant potentially could become a
game-changer
Before the emergence of Omicron, the econometric analysis by
GTAS Forecasting on monthly processed bilateral trade flows has
shown that COVID-19 still exerts an adverse impact on
international trade flows; however, the effect has been steadily
diminishing in magnitude
The cumulative number of confirmed cases of COVID-19
globally by 28 November 2021 reached 261.5 million and 5.2 million
deaths
The 2-week moving averages of global new cases globally started
to rise again by the end of October 2021, with global average death
rates following with no apparent delay; the peak of the 5th
wave is still ahead of us
The reported number of vaccinations globally reached
7.81 billion with 3.33 billion people fully vaccinated (with two
doses or equivalent one dose), which is equal to 42.7% of the
global population; to bust immunity, an increasing number
of countries, primarily advanced, started to distribute the third
booster dose
PMI new export orders
<span/>The
adjusted PMI new exports orders (PMI NExO) readouts for the global
manufacturing industry in October 2021 were above the benchmark
value of 50.0 points (50.60) the 14th month in a row proving the
sustained nature of recovery and still pointing to a positive
short-term outlook for global trade; in comparison to September
readouts they were lower by 0.42
Month on month PMI NExO deteriorated the most in the
U.S., and increased the most in the case of Canada &
India
PMI NExO in October 2021 for global manufacturing
(50.60) is above of, and for global services is below the 50.0
points benchmark (49.31); PMI NExO for global services went up
month-on-month for the first time after falling for a
quarter
Transport costs
Transport costs are still at very high levels,
adversely affecting global trade flows. It is due to
6-7-year highs in crude oil and natural gas prices, excessive port
congestion in many parts of the world, and COVID-19 related
contingency measures taken by states affecting the productivity of
ports and global logistic chains in general
The composite index of freight costs by the Shanghai
Shipping Exchange moderated to 3245 points (USD/TEU)
by the 3rd week of November (it was at the level
of 3315) thus falling by -2.1% m/m. It is unlikely to fall
significantly before Christmas/New Year season and only can
moderate more strongly in the Q1 of 2022; Month-on-month it
increased the most on routes to Japan, South Korea & South
America, and fell the most on W/C America, W/E Africa &
Europe
Real GDP forecasts
The most recent real GDP growth forecasts from IHS Markit were
published on 15 November 2021 and are based on the baseline
scenario of the impact of COVID-19 on the global economy (they did
not incorporate the omicron outbreak)
After a 3.4% decline in 2020, world real GDP is now
projected to increase 5.5% in 2021 and 4.2% in 2022. The growth
rates are expected to vary between 5.0% (3.8% in 2022) for
advanced, 6.6% (4.9%) for emerging, and 4.3% (5.1%) for developing
states; the growth rates are still predicted to moderate to around
3% in 2026
IHS Markit ECR team stresses that global economic
expansion is unevenly progressing, as the pandemic has uneven
distribution across regions. The inhibiting effects of regional
outbreaks (next waves) are transmitted globally through trade
relations. With expansionary fiscal and monetary policies
supporting demand, the implications are widespread supply shortages
and escalating prices (inflation readouts are the highest in
decades in many parts of the world)
From a quarterly perspective, real global GDP contracted in
every single quarter of 2020, with Q2 being the worst quarter for
the global economy in decades (-8.2%)
The now estimated growth rate in Q1 2021 was 3.5% and varied
between -0.1% for advanced and 9.0% for emerging economies. In Q2
2021, real global GDP is estimated to have grown by 11.7%, with the
growth impulse stronger for advanced (12.5%) than emerging
economies (10.4%). In Q3 growth rate moderated to 4.6%
globally (4.2% and 5.1% respectively) and is going to moderate
further in Q4 reaching 3.7% globally (4.2% for advanced and 3.1%
for emerging economies); starting from Q2 2022, growth in
emerging states should start continuously exceed the growth in the
group of advanced states thus catching-up could is likely to
occur
This column is based on IHS Markit Maritime & Trade
Global Trade Analytics Suite
(GTAS) data. The full version of the article is available for
our clients on Connect platform.
For more details about GTAS, please visit the product
page
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