Global trade to grow 7-9% in 2021: Moody’s

Moody’s Investors Service on Friday said it expects global trade to grow by 7-9% in 2021, following a 9% contraction in 2020 and that trade volumes will not reach their pre-Covid levels before 2022.

“We expect global trade to grow by 7%–9% in 2021, following a 9% contraction in 2020,” Moody’s said in its Global Trade Monitor-May 2021.

The credit rating agency said that though continued vaccination rollout and policy measures will support the economic recovery, boosting manufacturing activity and trade flows, the risk of new virus variants, a resurgence of infections and new restrictions persists.


While Coronavirus-induced supply chain disruptions will subside as the global economy recovers but government “buy national” strategies and new sanctions will add to disruptions in supply chains for medical supplies and strategic sectors.

“Companies will focus on multi-supplier, multi-source and reshoring strategies,” Moody’s said.

It said a pick-up in activity and stronger demand across developed countries have continued to drive improvement in emerging markets activity, even as countries battle new waves of infections. In emerging markets, high-frequency alternative trade indexes suggest an ongoing but uneven recovery in activity although slower vaccination rates and the spread of new variants pose ongoing risks to the economic and trade outlook.

In advanced economies, Moody’s said high-frequency alternative data point to an ongoing recovery in trade flows, which is supported by an uptick in manufacturing activity across advanced economies

“The pick-up in economic activity remains robust despite a spike in infections and targeted lockdowns, which supports our view that the impact of the renewed restrictions was more muted than the worst shock in Q2 2020, and the recovery in developed countries has resumed,” it said, adding that the risk of setbacks lingers as infections continue to resurge and new virus variants emerge.

As per Moody’s, Big Tech will remain a source of disagreement between the US and its trading partners, even as the US re-joins OECD digital tax negotiations. In March, the US announced retaliatory tariffs against Austria, India, Italy, Spain, Turkey, and the UK, while forgoing tariffs against the EU.