New data from the WTO has indicated that global services trade recovered slightly in the second and third quarters of 2021 following a sharp decline in the first part of the year.
Official statistics for Q2 and Q3 are not yet available, but the WTO’s global services activity index shows a reading of 102.5, which is above the baseline value of 100 that indicates growth.
Announcing the latest figures, WTO predicted that services trade will continue to recover but at a lower trajectory than previously this year.
The index only provides an approximate measure of the volume of global services trade, however.
Partial recovery
In the first quarter of 2021, when pandemic-related lockdowns were still in place in several major services trading nations such as the UK, world services trade was down 13.9% year-on-year,
According to the WTO, services trade has only staged a partial recovery since then, despite trade in goods rebounding sharply.
The impact on industries that have been worst impacted by the pandemic, including travel and tourism, is thought to be a major factor in this.
Lost momentum
According to the WTO, the post-pandemic recovery of services trade differs from the comparative rebound after the financial crisis of 2008-09, when services were more resilient than goods trade.
Economists from ABN Amro have also said that the global recovery in general has lost momentum and that a services recovery still has a long way to go.
“While goods consumption is due for a healthy correction, the services recovery has a long way to go before consumption returns to the pre-pandemic trend. The passing of the Delta wave is likely to give the services sector – which makes up the bulk of private consumption – a renewed boost,” ABN Amro told FX Street.
UK concerns
For the UK, IHS Markit’s Preliminary UK Services Business Activity Index for September was down slightly at 54.6, compared to August’s final readout of 55.0.
This score is a seven-month low for the UK, according to FX Street.
Chris Williamson, chief business economist at IHS Markit, warned that the September PMI data “will add to worries that the UK economy is heading towards a bout of ‘stagflation’, with growth continuing to trend lower while prices surge ever higher”.