THE RESUMPTION OF INTERNATIONAL TRADE

 

The Covid-19 pandemic has generated and will continue to generate uncertainty until a large part of the global population is vaccinated. The expectation is that this vaccination process will last until the end of 2021 or will continue until the 1st quarter of 2022.

Despite this, the WTO (World Trade Organization) points to a resumption of the world economy, with the respective increase in the flow of international trade. The WTO Merchandise Trade Barometer, one of the main thermometers in this assessment, pointed to 103.8 points in a recent measurement, indicating a growth trend. It is important to note that, when this measurement exceeds 100 points, it points to the growth of trade above the medium-term trend.

In the last quarter of 2020, we already experienced a recovery in commodity prices, led by increased demand from China and Asian countries. Added to this are stimulus packages launched in Europe and the United States. It is important to note that part of this recovery is natural, since we had a very strong economic fall, but another part is due to the recovery of the economies of China and Asia as a whole, to monetary and fiscal stimulus, to a more united and to a reasonably competent and stable government in the United States.

However, it is important to note that there are many elements of uncertainty about the sustainability of this growth process. Among them:

a) The effectiveness of vaccines against new variants of the virus.

b) The fiscal imbalance of several countries.

c) High inflation.

d) High unemployment rates.

Recently, there has been much discussion about a trend towards "deglobalization" and the increased adoption of protectionist policies by some governments. Undoubtedly, this is a sign that deserves attention, since governments of world powers are already pointing in this direction. However, the recent outcome of the US elections signals a cooling of this trend.

For about two decades, world trade has grown at a rate twice that of the world economy; a fact that happened until the 2008 Crisis. After the recession, between 2010 and 2020, international trade continued to grow 1% above the world economy. This shows that, despite recent discussions about the increase of protectionist policies in powers such as the United States and the United Kingdom, the importance and strength of world trade has been noted.

Latin America, however, remains a doubt and a turning point in this resumption, which naturally includes Brazil. In fact, we are an excessively closed economy, but many of the reforms proposed by the Brazilian Executive Power and which are under evaluation in the Legislative point to a necessary modernization and greater opening of our economy, aiming to increase our competitive advantages and more active participation in International Trade.

In conclusion, despite the many doubts that still remain about the consistency of this resumption of the economy and International Trade, the signs are still showing positive.