WTO report shows that global trade in services remains below pre-pandemic levels
- Date: Feb 09, 2022
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The World Trade Organization (WTO) recently released a report on trade in services, saying that in the third quarter of 2021, global trade in services increased by 25% year-on-year, keeping pace with the growth of trade in goods. Digitally deliverable services such as computers, financial and business services are the main drivers of growth. . The surge in freight rates has boosted global shipping services by 45% year-over-year and 12% compared to the same period in 2019.
The report said that since the level of global trade in services in the third quarter of 2021 is still 5% lower than that of the same period in 2019, the latest growth value cannot yet represent that trade in services has fully recovered to pre-pandemic levels. The uneven distribution of COVID-19 vaccines around the world, the emergence of new mutated strains of COVID-19, and border restrictions in various countries continue to have an impact on international travel. The recovery has been fueled by factors such as soaring consumer demand for some goods due to coronavirus lockdowns and fiscal stimulus in advanced economies. But the surge in freight rates has been further fueled by surging demand and coronavirus-related restrictions, resulting in port bottlenecks, misallocation of containers around the world and delays in deliveries. Asian transport exports in the third quarter of 2021 increased by 71% year-on-year and 46% over the same period in 2019.
The report shows that the recovery of air passenger traffic continues to lag and is still far below the pre-pandemic level. Global international traveler spending in the third quarter of 2021 increased 54% year-on-year from a low base in 2020, but was still 52% lower than the 2019 figure. Compared to pre-pandemic countries, European countries saw the lowest decline, at 32%, as travel restrictions eased across the continent in summer 2021. By contrast, Asian tourism exports are down 81% from pre-pandemic levels as some countries remain closed.
In the third quarter of 2021, other services such as construction, entertainment, legal and financial services grew by an average of 15% year-on-year. As a group, these services are less affected by the epidemic, with exports shrinking by only 1% year-on-year in 2020.
In the first three quarters of 2021, computer services continued to grow strongly, with cumulative exports up 34% compared to the same period in 2019. Both developed and developing countries experienced rapid growth. Among them, computer service exports from the United States increased by 29%, Mauritius increased by 42%, Ireland increased by 51%, Ukraine increased by 63%, and Bangladesh increased by 68%.
Internet traffic peaked during the pandemic. According to the International Telecommunication Union (ITU) estimates, the global Internet bandwidth will increase by 30% in 2021. However, compared to 2019, telecom service expenses fell by 4% in the first three quarters of 2021, reflecting a steady decline in global telecom service prices, especially bundled communication services.
The construction industry remains one of the sectors hardest hit by the pandemic. Global construction exports fell 18% in 2020, and the first three quarters of 2021 were down 12% from the same period in 2019. The EU and China, the world’s largest builders, saw their construction exports fall by 19% and 4% respectively from 2019. The decline was largely driven by supply chain bottlenecks such as steel and labor, rising prices and delays or cancellations of construction projects.
According to the latest data, the cumulative value of services exports from January to November 2021 remained below 2019 levels in many economies, with Australia seeing the largest drop of 35%. Africa’s Moroccan and Uganda services exports were down 20 percent from 2019. In contrast, China and South Korea’s service exports grew by 37% and 12%, respectively, underpinned by transport services. Services exports from other Asian economies, such as Pakistan and India, have surpassed pre-pandemic levels thanks to computer services.