While economies may be smaller, 2021 trade should top 2019 totals

In the past couple of weeks, both the International Monetary Fund (IMF) and World Trade Organisation ( WTO) have prepared forecasts that take into account the effects of the current pandemic. Both expect a sharp drop in economic activity and trade in 2020, followed by a recovery in 2021. We have taken a look at what the combination of an awful 2020 and better 2021 would mean for the overall size of economies around the world and trade levels compared to 2019.

How big will the world economy be at the end of 2021?

The interactive map below provides an overview of the IMF's recent GDP forecast for countries around the world. The size of the bubble represents the size of the economy in current U.S. dollars at purchasing power parity (PPP) in 2019, while the color represents whether the respective economy in 2021 is expected to be larger or smaller than in 2019. The top shows historical real GDP growth since 2015, with a forecast to 2021. Many Western economies are expected to be 3%-5% smaller in two years. Germany is expected to outperform the rest of Europe and be “only” 2% smaller in 2021. After near zero growth in 2019, both China and India are expected perform strongly, with their economies being 10% and 7% larger, respectively, than in 2019.

.embed-container {position: relative; padding-bottom: 80%; height: 0; max-width: 100%;} .embed-container iframe, .embed-container object, .embed-container iframe{position: absolute; top: 0; left: 0; width: 100%; height: 100%;} small{position: absolute; z-index: 40; bottom: 0; margin-bottom: -15px;}

What about trade?

With regard to trade, the WTO has prepared both optimistic and pessimistic scenarios. In the optimistic scenario, the volume of world trade would drop by 13% in 2020 and increase 21% in 2021, implying that by 2021 the volume of world trade would be 6% above 2019 levels. The pessimistic scenario would see a drop of 32% in 2020, followed by 24% growth in 2021, implying a drop of 16% below 2019 levels. The two figures below show how this would manifest regionally. Figure 1 – Volume of World Trade 2021 vs 2019 (Optimistic Scenario)

Figure 2 – Volume of World Trade by Region 2021 vs 2019 (Pessimistic Scenario)

What does this mean for air freight?

Between 35% and 40% of the value — but less than 2% of the volume — of world merchandise trade, excluding bulk commodities, is carried by airfreight. Airfreight may well outperform world trade overall, thanks to its role in dealing with supply chain disruption and enabling fast inventory replenishment.

Our own analysis suggests that overall airfreight traffic could decline by 15% in 2020, followed by a 20% recovery in 2021, and a normal growth trajectory thereafter. This is consistent with the decline-recovery picture following the 2008 financial crisis. While this current crisis is different in many ways, the policy response may well lead to similar outcomes depending on when normal life resumes across the world.

While economies may be smaller, 2021 trade should top 2019 totals

Asian, European airport cargo volumes drop in March

CFA 2020: COVID-19 rewrites air cargo playbook

Related Posts

Routes, risk and resilience: The transformation of global freight

June brings stability, not relief

May freighter capacity extends April’s higher operating level

CFA 2020: COVID-19 rewrites air cargo playbook

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password