After A Sluggish Second Half Of 2022, Global Trade in Goods And Services Rebounded in The First Quarter Of This Year, But The Outlook For Global Trade For The Rest Of The Year Is Bleak, According To The Global Trade Update Released Today By The United Nations Conference On Trade And Development.
Between January and March 2023, global trade in goods increased by 1.9% compared to the last quarter of 2022, increasing by about $100 billion. Global trade in services also increased by about $50 billion, an increase of about 2.8% compared to the previous quarter.
Forecasts show a slowdown in global trade growth in the second quarter, due to recent downward revisions to global economic forecasts and factors such as persistent inflation, financial vulnerabilities, the war in Ukraine and geopolitical tensions.
"Overall, the outlook for global trade in the second half of 2023 is pessimistic, with negative factors dominating," the report said. "
U.S.-China trade interdependence has declined
The geographical distance of international trade has remained relatively stable over the past five quarters, suggesting a lack of significant nearshoring or farshoring, at least on average.
The report notes that "friendly shoring" has been on the rise since late 2022, characterized by a realignment of bilateral trade flows to prioritize countries with similar political values.
The war in Ukraine, the decoupling of US-China trade interdependence, and the consequences of Brexit have shaped important bilateral trade trends during this period.
"At the same time, there has been a decline in the diversification of trading partners, which means that global trade has become more concentrated in key trading relationships," the report said. "
The report suggests that trade interdependence between China and the United States is declining. This suggests that over the past year and a half, the importance of the United States as a Chinese export market has been relatively diminished. During this period, the United States further reduced its dependence on China as a supplier.
Trade performance varies among major economies
The report shows that over the past four quarters, the growth of trade in goods between the world's major economies has been mixed.
Brazil, India, the United States and the European Union all saw significant growth in imports and exports.
However, on a quarterly basis, the trade trend in major economies from January to March 2023 was relatively subdued, in many cases negative. However, exports from China and India have increased significantly.
Regional trade trends
On an annual basis, international trade grew in all regions, with the exception of Russia and the economies of Central Asia. However, growth in East Asia has been significantly below average.
On a quarterly basis, the first quarter of 2023 saw a decline in trade in most regions, with the exception of the Pacific region, North America, and Africa, which saw weak growth.
Intraregional trade during the same period followed a similar pattern. However, it is worth noting that intra-African trade increased by 3 per cent, outpacing intra-regional trade in other regions.
The situation in various industries
Global trade trends over the past four quarters have been influenced by the energy sector, with higher prices in the energy sector leading to an increase in trade volumes until an 11% quarterly contraction between January and March 2023.
Other sectors that have seen trade growth include agricultural products, clothing, chemicals, and road vehicles.
On the contrary, the trade turnover of office and communication equipment, as well as in the transport sector, declined, and its downward trend continued until the first quarter of 2023.
