The supply chain crisis appears to be subsiding, according to the World Trade Organization’s (WTO) most recent World Trade Report, and John Miller, analysis at Trade Data Monitor.
“Cooling import demand could help ease port congestion, but backlogs and delays are unlikely to be eliminated as long as container throughput remains at or near record levels,” the WTO said Monday.
The Geneva-based body declared that its goods trade barometer had dropped to 99.5 points in November, with baseline 100, down from a record 110.4 in August.
“Cooling import demand could help ease port congestion,” the WTO added, “but backlogs and delays are unlikely to be eliminated as long as container throughput remains at or near record levels.”
There are many signs that world trade will hold steady well into next year. For example, exports from China, by far the U.S.’s top supplier of goods for U.S. consumers, increased 27.1% to $300.2 billion in October. Shipments to the U.S. leapt 22.8% to $53.8 billion.
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After reaching a nadir during the Covid crisis, China has now registered 13 straight months of double-digit export growth. The WTO has predicted that global trade will increase 10.8% in 2021, and 4.7% in 2022.
The latter is considered a strong figure, economists say. The WTO said Monday that recent performance appears to be in line with these predictions. At the same time, it warned of the risks of regional disparities, and feeble trade in services.
Decline in global trade
The reasons for the recent decline in the overall trade index include “recent supply shocks, including port gridlock arising from surging import demand in the first half of the year and disrupted production of widely traded goods such as automobiles and semiconductors, have contributed to the barometer’s decline,” the WTO said.
The industrial sector that is hurting the most is automotive, where the index fell to 85.9 from 106.6, mainly because of a shortage of semiconductors.
Nevertheless, there are other risks revealed in recent trade data. One is price inflation. Values of essential commodities are rising, trade figures show. Chinese imports of grain, for example, in October declined 25.2% by quantity, to 9.7 million tons, but rose 0.2% by value, to $4.6 billion.
Crude petroleum imports fell 11% by quantity, to 37.8 million tons, but increased 53.5% by value, to $20.7 billion. If Chinese consumers and factories are paying billions more to receive less oil, that is bound to ripple throughout the global economy. Another is demand from other parts of the world, especially Asia.
There are simply more middle- and upper-class consumers buying the same goods that Europeans and Americans have coveted for decades.
The pandemic’s work-from-home economy appears to be subsiding. People are buying more of the things they need to move about the world.
Chinese exports of shoes rose 35.5% to $4.3 billion. Shipments of suitcases and luggage increased 44.9% to $2.7 billion. While some of that increase was due to a rise in prices, it was mostly because people really are traveling more. Exports of luggage by quantity, for example, shot up 31.5% to 231,000 tons.
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