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86 Economic Survey 2021-22

GLOBAL ECONOMIC ENVIRONMENT

3.1 The COVID-19 pandemic continued to impact the global economic environment
during 2021. The first half (H1) of the calendar 2021 witnessed an acceleration in the global
economic activity, that lifted the merchandise trade above its pre-pandemic peak. Reflecting
this, International Monetary Fund (IMF) in its World Economic Outlook (WEO) October 2021
edition projected higher growth of global trade volume in goods and services of 9.7 percent
in 2021, moderating to 6.7 percent in 2022, in line with the projected global recovery. World
Trade Organization (WTO) in its October 2021 release, also upgraded its forecast for global
merchandise trade volume growth to 10.8 percent in 2021, followed by a 4.7 percent rise in 2022
(Figure 1).

Figure 1: Projection for World Trade Volume Growth

World Trade Volume in Goods and Services (IMF)
World Merchandise Trade Volume (WTO)-RHS
12 5.6 9.7 10.8 6.7 12

8
8
Annual Per cent Change -4 3.9 0.9 4.7 4 Annual Per cent Change
4

0
0
-4

-8
-8.2 -8
-12 -12
2017 2018 2019 2020 2021 (P) 2022 (P)
Source: IMF and WTO
Note: Projections. The shaded area represents projected growth.
3.2 Apart from revival in global economic activity, the high growth rate for global merchandise
trade volume in H1 of 2021 is also aided by the previous year’s slump, which bottomed out in
the second quarter of 2020. The pick-up in momentum witnessed during the first two quarters
of 2021 weakened again by the third quarter (Q3) due to rapid spread of Delta variant and the
threat of new variants. It led to breakage in critical links of global supply chains resulting in
longer than expected supply disruptions, taking its toll on the global recovery. The world trade
in nominal value terms (US dollar) during 2021 tracked that in terms of volume: deceleration in
Q3, following an acceleration in first quarter (Q1) and second quarter (Q2) (Figure 2).

3.3 Nonetheless, WTO’s prediction of merchandise trade volume growth of 10.8 per cent for
whole of 2021 could still be realized if fourth quarter data could show a pick-up. This is possible
even though the WTO’s Goods Trade Barometer has signalled a cooling of trade growth in the
closing months of 2021 (index dropped to 99.5 in September 2021– close to the baseline value
of 100), but it still remains on trend. 1

WTO's goods trade barometer index is a leading indicator that signals changes in world trade growth two to three months ahead of merchan-
1
dise trade volume statistics. Its baseline value is 100, a value greater than 100 suggests above -trend growth while a value below 100 indicates
below-trend growth.