- Trade in commercial services is set for a fragile recovery in 2021, after a considerable fall in 2020: Global exports and imports values are forecast to increase by just 2.7% and 1.2%, respectively, in 2021, compared to 9.6% and 0.9%, respectively, in Asia and the Pacific. The stronger export growth of Asia and the Pacific will boost the region’s prominence in global services exports from 23.8% in 2020 to 25.4% in 2021, while its import share will decline slightly from 30.2% to 30.1%.
- Unlike merchandise trade, global and regional services trade remain well below pre-pandemic levels; global services trade in 2021 is estimated to be 18.0% (US$ 180 billion), lower than before the pandemic (2019), while the region has seen a 19.6% (US$55 billion) loss.
- As the outbreak of new COVID-19 sub-variants continued, travel services were hit the hardest. In the first quarter of 2021, global travel trade was 60% down compared with 2019, despite recovering from its lowest point in 2020 (Q2). This is especially relevant for countries in South-East and East Asia, whose economic recovery was interrupted by new lockdown restrictions.
- In contrast, non-travel services have tended to be on a recovery track. Transport and other business services have followed the recovery in global and regional goods trade, having experienced sustained growth after the initial slump in Q2 2020. A positive outlook for merchandise trade growth promises to keep boosting transport services trade. Accelerated by the pandemic, digitalization has boosted demand for ICT and financial services. Both sectors have enjoyed positive performances, globally and regionally.
- Going into 2022, global and regional services trade are expected to continue recovering slowly and heterogeneously across sectors. While transport, other business services and ICT are anticipated to flourish, travel services will experience a weak recovery as border crossing remains more difficult than in pre-pandemic times. The possibility of new lockdowns and border restrictions, slower than expected vaccination rollouts in 2022 and maritime shipping disruptions remain important downside risks in the shorter-term.
- Beyond 2022, the acceleration of digitalization is expected to be one of the pandemic’s most enduring legacies. Indeed, as digitalization of the regional and global economies intensify, it can be expected to redefine the nature of services trade in the medium to longer-term.