In a sign of continuing economic recovery since the third quarter of last year, international merchandise trade among G20 nations reached record levels in the first quarter of 2021.

When measured in seasonally adjusted current US dollars, exports and imports of goods increased by 8% and 8.1%, respectively, from the previous quarter, the OECD reported.

All G20 economies, except the United Kingdom, showed positive growth in the first three months.

However, the depreciation of the US dollar and related increases in commodity prices were a major factor in the recovery from the COVID‑19 lows.

Prices of agricultural commodities, including cereals and vegetable oils, increased by over 10% in Q1 2021, while prices of metals are close to levels last observed in 2011.

Argentina (exports up 33.3%), Australia (up 17.5%), Brazil (up 14.7%), and South Africa (up 17.3%), are among the G20’s largest exporters of those products and have benefitted from the rising commodity prices.

At the same time, a nearly 35% increase in crude oil prices during the period pushed up the export values of Canada (up 10.8%), Russia (up 13.1%), and Indonesia (up 12.4%).

For most G20 economies, in turn, the energy price increases resulted in higher import values.

G20 merchandise trade based on figures in current prices (billion US dollars), seasonally adjusted. Source: OECD

A pandemic-related boom in purchases of electronics led to a surge in demand for semiconductors and integrated circuits. Along with several other factors, this led to supply failing to keep pace with demand, followed by shortages and price rises, the OECD said.

While higher trade in semiconductors partly contributed to total merchandise trade growth in the United States – with exports and imports up by 5.7% and 5.3%, respectively – chip shortages affected, for instance, automotive supply chains.

A slowdown in shipments of vehicles and parts weighed on total merchandise exports from France (up 2.7%) and Mexico (up 0.4%), both markedly below the G20 average.

China, the G20’s largest merchandise trader, saw exports rise by 18.9% and imports were up 19.0% in the first quarter of 2021.

Chinese import growth was led by metals and metal ores, cereals and integrated circuits, while export growth was led by electronic products, vehicles, and textiles, including face masks. In the European Union, exports and imports grew by 3.8% and 5%, respectively.

The UK was the only G20 economy to record negative merchandise trade growth, both for exports, of -5.7%, and imports, of -10.5%. This slowdown followed large increases in the previous quarter caused by stockpiling in preparation for the exit from the EU single market.

In contrast, the growth in trade in services showed signs of moderation in the first quarter of 2021. Based on preliminary information available for some G20 economies, the OECD estimated the export and import of services grew by 4.4% and 2.5%, respectively, after strong growth in the previous quarter.

OECD GDP growth slows

Last week, the organisation reported slower economic growth of only 0.3% in the OECD area in the first quarter of 2021, as a result of stronger COVID-19-containment measures in some countries.

Among the G7 economies, GDP growth dropped to 0.4% from 0.9% in the previous quarter. While GDP contracted in Germany (-1.7%), the UK (-1.5%), Japan (-1.3%) and Italy (-0.4%), positive growth was recorded in France (0.4%), Canada (1.6%) and the US (1.6%).

Compared with pre-pandemic levels of fourth quarter 2019, GDP for the OECD area as a whole was 2.6% lower, while among G7 nations the UK suffered the largest fall in economic activity of -8.7%. During that period, the US experienced the smallest decline of the major seven economies at -0.9%.

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