Global services trade remains below pre-Covid levels, says WTO

World trade in services is recovering but is yet to reach pre-pandemic levels, said the World Trade Organization (WTO) on Thursday.

This implies that the impact on India’s exports may see only marginal improvement.

The services trade barometer showed a reading of 102.5, suggesting that the volume of services trade during April-September will continue to recover, once official statistics are available.

“However, the fact that the indicator has recently turned downwards suggests that the expansion may proceed along a new, lower trajectory if the Covid-19 pandemic turns out to have a persistent impact on services trade,” said an official statement.

A reading of 100 indicates growth in line with medium-term trends. Readings greater than and below 100 indicate above-trend and below-trend growth, respectively.

Even as most component indices are on or above trend, the overall picture is mixed. The construction index (97.4) fell below the trend, while the index of information and communications technology services (100.0) and passenger air transport (105.6) picked up recently, but remained well below pre-pandemic levels.

Global services purchasing managers’ index (102.7) and financial services (100.2) indices indicated that the pace of growth has slowed down.

Growth in container shipping (106.8) has eased, even as throughput hit record highs. The recent surge in shipping costs appears to be more due to strong demand for traded goods than supply constraints, said the WTO.

“The recent performance of services trade differs from the financial crisis of 2008-09, when services trade was more resilient than goods trade. Year-on-year growth in services trade should turn strongly positive in the second quarter due to a low base value in the previous year,” said the WTO.

India’s services exports, focused on information technology (IT) and IT-enabled services, have managed to fare better than global peers. According to the Department of Commerce data, in August, services exports stood at $18.92 billion, a 17.22 per cent rise on-year and 7.83 per cent jump, compared to the same period in 2019.

Cumulative services exports have managed to fare better than global peers at $92.08 billion in the first five months of the current fiscal year.

The barometer is part of the WTO’s efforts to develop new insights into services trade and will be released twice annually.

According to the goods trade barometer, global merchandise trade in August continued its robust recovery from the shock of the pandemic, and hit a reading of 110.4, the highest on record since the indicator was first released in July 2016.