Share
Goods trade stages impressive rebound as restrictions are eased
Trade in goods is staging an impressive recovery globally, returning to its pre-pandemic trend. All regions are recovering well, with China coming out as the star performer. However, some bilateral trade relationships remain difficult, threatening to drag on overall trade. Joining CNBC Africa to paint a clear picture of the outlook on goods trade is Jacques Nel, Head of Africa Macro at NKC African Economics.
Thu, 29 Apr 2021 15:48:41 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The surge in global demand and economic expansion in key economies like the US and China has propelled the rapid recovery in goods trade, returning to pre-pandemic levels.
- Despite the overall recovery, challenges persist in bilateral trade relationships, notably between the US and China, and the impacts of the UK's exit from the Eurozone on global trade remain uncertain.
- While goods trade shows a robust recovery, services trade is expected to lag due to prolonged travel restrictions and uncertainties, emphasizing the need for a cautious approach in navigating the post-pandemic trade landscape.
The global trade in goods is showcasing a remarkable recovery, bouncing back to pre-pandemic levels as restrictions are being eased across the world. Jacques Nel, the Head of Africa Macro at NKC African Economics, highlighted the main drivers that have fueled this speedy resurgence. One of the significant factors contributing to this revival is the substantial increase in demand witnessed worldwide. The US economy expanded by 6.4% in the first quarter, with a projected 7% growth for the year, demonstrating a surge in demand. This uptick can be attributed to improving health conditions, successful vaccine drives, and the injection of a $2 trillion stimulus package, a portion of which was distributed directly to consumers. Additionally, China's economy, the second-largest globally, is expected to grow by nearly 9% this year, creating a ripple effect on surrounding economies due to the shift in growth focus from investment to consumption. However, despite the overall recovery, some challenges persist, particularly in certain bilateral trade relationships, which could potentially impede the trade progress on a global scale. One such instance is the ongoing trade tensions between the US and China, although there has been a recovery in their trade, it still lags around 20% below pre-trade war levels. Another looming issue is the repercussions of the UK's exit from the Eurozone, with full economic and trade implications yet to unfold entirely. These bilateral disputes pose risks to the 2021 trade landscape as uncertainties and complexities persist. Nel emphasized that while goods trade is rebounding swiftly, services trade is expected to remain subdued this year, mainly due to the prolonged effects of the travel slump. Travel and tourism are anticipated to take several years to recover to pre-pandemic levels, primarily due to border closures, travel restrictions, and consumer reluctance to undertake international travel amidst the ongoing uncertainties surrounding the pandemic. The Africa Free Trade Agreement, initiated in January, aims to enhance intracontinental trade and catalyze local manufacturing. However, the results of this agreement are anticipated to manifest in the long term, with a gradual reduction in tariffs over a decade. Nel underscored the significance of producing goods that align with consumer demands to foster sustainable trade growth within the continent. Despite the positive trajectory in goods trade, the risks remain prevalent, with potential threats stemming from escalating trade tensions and the unpredictability surrounding the COVID-19 pandemic. The fluctuating trade landscape underscores the delicate balance between recovery and risk, urging cautious optimism amidst the prevailing uncertainties. While the global goods trade paints a promising picture of revival, the road ahead remains fraught with challenges that necessitate a judicious approach towards trade policies and agreements.
SIGN UP FOR OUR NEWSLETTER
DAILY UPDATE
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.