With global businesses adjusting to the new normal, the value of international trade is expected to undergo a quick recovery as merchandise trade expanded more rapidly than expected at the start of 2021. According to new estimates from the World Trade Organisation, the volume of world merchandise trade is expected to increase by 8.0% in 2021 after having fallen 5.3% in 2020.
Although trade growth is on a positive outlook, the instability is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in developing economies. The forecast published by the World Trade Organisation showcases two possible scenarios for international trade. On one hand, the positive hand, production, and distribution of the vaccine is accelerating. This would allow some measures to be relaxed sooner. As such, adding approximately 1% to the world’s GDP growth.
Additionally, around 2.5% to the world’s merchandise trade volume growth in 2021 would be added. Consequently, this would allow trade to return to its pre-pandemic trend by the fourth quarter of 2021. On the other hand, the downside scenario, vaccine production does not keep up with demand and/or new variants of the virus emerge against which vaccines are less effective, resulting in drop of around 1% global GDP growth in 2021 and lower trade growth by nearly 2%.
The Middle East, being a rich region in natural resources, saw one of the largest declines in imports, nearly 12%. In contrast, strong forecasts for the Middle East are expected, that is a 13% growth. By the fourth quarter, the Middle East would have recovered much of its lost ground, with respective year-on-year declines of just 3.0% and 2.4%. Middle Eastern exports also fell precipitously in the second quarter as oil consumption slumped worldwide due to restrictions on international and domestic travel.
The changes we see nowadays will pave the way for new forms of international trade, business, and communication, proving resilience, agility, adaptability, and innovation in the face of unexpected circumstances. This brings consistency that would help international business in facing global crises. With that said, UK firms considering new export territories would do well to consider the Middle East and UAE as viable destinations for further expansion and business development opportunities.
About the author:
LinkedIn: Amjad Al-Ja’fari