World trade has already exceeded its pre-pandemic level and is growing faster than expected. The World Trade Organization (WTO) said in a report in which it also revised upwards its trade projections for 2022. This is good news for import and export companies in Central America. Randall Castillo Ortega, an entrepreneur and expert in international trade, explains how trade is rebounding faster from the COVID-19 pandemic.
According to new estimates, the volume of international trade will have increased 10.8% this year, the largest increase in 11 years, and 4.7% in the next year compared to the 8% and 4% that the same entity projected in March. This follows a drop of 5.3% in 2020 due to the coronavirus pandemic. The exchange of goods and services of Latin American countries, meanwhile, will grow 7.2% during 2021, after three consecutive years of falls, with exports and imports 2.2% and 8.1% higher than in the year before the pandemic.
Regarding the global Gross Domestic Product (GDP), the WTO forecasts an increase of 5.3% for this year (after falling 3.8% in 2020) and expects another rise of 4.1% for 2022, driven by a strong monetary and fiscal policy of assistance. It is also expected that the exchange of services will still lay behind that of goods, especially in the sectors related to leisure and tourism.
“According to economists at the Geneva-based organization,” explains Castillo, “the rebound will moderate as trade returns to the long-term trend it maintained before the health emergency when, after the 2009 financial crisis, they maintained a growth rate similar to that of gross product.”
Regarding South and Central America, imports are expected to grow 10.8% by the end of 2022 compared to 2019, and their exports by 4.8%. In addition, 2021 is expected to be a year of strong rebound in the region, with 7.2% year-on-year growth in exports and 19.9% in imports.
The strong recovery in external purchases in South America (the third region with the highest increase behind Asia and North America) reflects a rebound from the recession experienced by some of its main economies in 2019, according to the WTO. The high annual growth rate of merchandise trade volume recorded in 2021 mainly reflects the sudden decline of the previous year, which bottomed out in the second quarter of 2020.
According to a survey by the multinational Harvey Nash and the firm KPMG, the coronavirus pandemic generated one of the largest investments in technology in history. This unexpected and unplanned increase in technology investment has also been accompanied by huge changes in the way companies function, with more organizational changes in the last six months than seen in the previous ten years.
The investment propelled social networks as a channel of attention, robotization and self-attention as a basic step, and the use of tools and platforms that make management much more productive will be the trends that will mark the sector this year. Meanwhile, although electronic invoicing systems began as an alternative that allowed to save costs and inventories, today, they are used by many companies as a tool to manage financial and commercial information. They provide data on market opportunities and even allow them to demonstrate to financial institutions the payment capacity of an organization, facilitating the companies’ access to credit.
Starting from a lower point, year-on-year growth in the second quarter of 2021 was 22.0%, but the figure is forecast to fall to 10.9% in the third quarter and 6.6% in the fourth quarter, due in part to the rapid recovery in trade in the last two quarters of 2020. “For the forecasts for 2021 to be met, only a quarter-on-quarter growth of 0.8% on average each quarter in the second half of this year was needed, which is equivalent to an annualized rate of 3.1%,” asserts Castillo.