International trade to slow further through to 2030, says BBVA

March 24, 2021

HO.NG KONG -- International trade will slow down by 2030, due to both traditional factors (technology, economic development, trade policies) and new determinants (COVID-19 and sustainability), says a new report from BBVA Bank. 

International trade has slowed mainly since the 2008 GFC, it says, after having grown sharply in previous decades on declining trade costs, trade liberalistion and China's  integration into global markets, among other factors.

Economic factors (such as cost differentials) will be less relevant drivers of trade than they have lately been, while geopolitical and regulatory issues will play a bigger and in general negative role, BBVA says.

Although prospects for trade are not bright, some factors such as better global governance, higher technological gains and the openness of new markets could trigger more positive scenarios for international trade. 

International trade is expected to continue exhibiting a downbeat tone over the next decade, the report says, with trade-income elasticity likely to remain close to 1, well-below the levels reached before the GFC.

There are positive prospects for high-value services, the report says, including financial services, which will partially offset expected moderation in goods trade, mainly in high-tech, GVC-intensive manufacturing. (ATI).