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G L O B A L E C O N O M I C P R O S P E C T S | J A N U A R Y 2 0 2 1
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Comprehensive Economic Partnership, higher
tariffs on U.S.-China trade remain in effect, and
there has been little recent progress toward “deep”
trade agreements that foster broader economic
integration (Mattoo, Rocha, and Ruta 2020;
World Bank 2020a). Trade policy uncertainty has
fallen from its highs in 2019 but is still above
historic norms, in part due to the potential of
renewed trade tensions between major economies.
The recently announced Brexit deal between the
United Kingdom and the European Union is
the virus, and some countries that adopted
widespread test-and-trace policies have suffered
fewer health and economic consequences (Konda
et al. 2020; Schünemann et al. 2020).
Several vaccine candidates are in development, and
some have already been used in countries such as
the Russian Federation and China. With the
completion of some Phase 3 trials, vaccination has
begun in a number of advanced economies. A
more general rollout of several effective vaccines is
envisioned to proceed in early 2021 in advanced
economies and major EMDEs, starting with
vulnerable populations. It is expected that the
vaccine rollout will be considerably slower in other
EMDEs and LICs as a result of difficulties with
procurement and distribution.
Global trade
Global trade collapsed last year as border closures
and supply disruptions interrupted the interna-
tional provision of goods and services. Goods
trade fell more rapidly and recovered more swiftly
than during the global financial crisis, while
services trade remains depressed (figure 1.4.A).
Relative strength in manufacturing, alongside
persistent weakness in services, reflects the unusual
nature of the recession, which has shifted
consumption patterns toward goods and away
from services requiring face-to-face interactions
(figure 1.4.B). The recovery in global merchandise
trade has also benefited from the resilience of
global value chains to supply disruptions (Hyun,
Kim, and Shin 2020).
Continued impediments to international travel
and tourism are contributing to persistent
weakness in services. International travel has
recovered from its April trough but has stabilized
far below pre-pandemic levels (figure 1.4.C). In
the decade following the global financial crisis,
rising trade intensity of global activity was almost
entirely driven by trade in services (figure 1.4.D).
The same is unlikely to be the case in the current
recovery, as services will struggle to rebound until
countries loosen international travel restrictions.
Although there have been some steps toward trade
liberalization, such as the African Continental
Free Trade Area agreement and the Regional
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