THE volume of world merchandise trade is expected to increase by 8 per cent in 2021 after its COVID-19 pandemic-induced collapse last year that bottomed out in the second quarter of 2020-21, the World Trade Organisation (WTO) said on Wednesday.

Prospects for a quick recovery in world trade have improved as merchandise trade expanded more rapidly than expected in the second half of last year. It had fallen 5.3 per cent in 2020, a smaller decline than previously estimated.

"The strong rebound in global trade since the middle of last year has helped soften the blow of the pandemic for people, businesses, and economies," WTO Director-General Ms Ngozi Okonjo - Iweala said. "Keeping international markets open will be essential for economies to recover from this crisis and a rapid, global and equitable vaccine roll-out is a prerequisite for the strong and sustained recovery we all need."

Effective management of the pandemic limited the extent of the economic downturn in China and other Asian economies, allowing them to continue importing. These actions helped prop up global demand and may have prevented an even larger trade decline.

However, trade growth is expected to slow to 4 per cent in 2022, and the effects of the pandemic will continue to be felt, the Geneva-based trade body said.

The relatively positive short-term outlook for global trade is marred by regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries.

Insufficient production and distribution of vaccines, or the emergence of new, vaccine-resistant strains of COVID-19 could see global Gross Domestic Product (GDP) fall by 1 percentage point in 2021 and shave nearly 2 percentage points from trade growth.

"As long as large numbers of people and countries are excluded from sufficient vaccine access, it will stifle growth, and risk reversing the health and economic recovery worldwide," said the WTO chief.

Over the medium-to-long term, public debt and deficits could also weigh on economic growth and trade, particularly in highly indebted developing countries.

The WTO noted that in 2021, demand for traded goods will be driven by North America (11.4 per cent), thanks to large fiscal injections in the US, which should also stimulate other economies through the trade channel. Europe and South America will both see import growth of around 8 per cent, while other regions will register smaller increases.

Much of global import demand will be met by Asia, exports from which are expected to grow by 8.4 per cent in 2021. European exports will increase nearly as much (8.3 per cent), while shipments from North America will see a smaller rise (7.7 per cent).

Strong forecasts for export growth in Africa (8.1 per cent) and the Middle East (12.4 per cent) depend on travel expenditures picking up over the course of the year, which would strengthen demand for oil. Meanwhile, South America will see weaker export growth (3.2 per cent).