Service export recovery

Trade in commercial services in the Asia-Pacific region is recovering, but the recovery remains both partial and fragile. Services exports from the region remain about 20 per cent below pre-pandemic levels. ESCAP estimates that global export and import values have increased by just 2.7 per cent and 1.2 per cent, respectively, in 2021, while in the Asia-Pacific region these figures were 9.6 per cent and 0.9 per cent, respectively. This stronger export growth will boost the region’s prominence in global services exports from 23.8 per cent in 2020 to 25.4 per cent in 2021, while its import share will decline slightly from 30.2 per cent to 30.1 per cent.

Nevertheless, owing to Covid-19 sub-variant outbreaks during the second half of 2021, the current trade recovery may lose its momentum.

Unlike merchandise trade, global and regional trade in services remain well below pre- pandemic levels: Global services trade in 2021 is estimated to be 18.0 per cent (US$ 180 billion), lower than before the pandemic (2019), while the region has seen a 19.6 per cent (US$55 billion) loss.

Sector-wise, travel services have been hit the hardest, while merchandise-related services, ICT and financial services tended to perform positively.

Indeed, despite recovering from its lowest point in 2020 (Q2), global travel trade was 60 per cent down during the first quarter of 2021 compared with 2019. In Asia and the Pacific, travel services exports and imports declined by 63.8 per cent and 59.5 per cent, respectively, during the same period. This decline has hit some countries particularly hard: Azerbaijan, Fiji, Indonesia, Lao People’s Democratic Republic, Malaysia, Philippines, Sri Lanka and Thailand lost more than 90 per cent of their travel exports year-on-year.

In contrast, transport and other business services have followed the recovery in global and regional goods trade, experiencing sustained growth after the initial slump in Q2 2020. However, significant increases in oil prices combined with inflated containership rates have contributed to higher logistics costs and limited the growth of these sectors during the second half of the year. Information and communication technologies (ICT) and financial services have enjoyed positive trade performance globally and regionally, accelerated by the pandemic-induced digitalization boost. 

Finally, as the shifts towards remote work and increased digitalisation are expected to linger, ICT, insurance, pensions and financial services will continue to expand into 2022.

unescap