December 14, 2022
The UN agency for trade and development, UNCTAD estimates that this year’s global trade will reach about $32 trillion, but inflation has recently reversed some gains. Analysts at UNCTAD claim that in the second half of 2022, global growth “became negative.”
By the end of the year, the UN agency predicted that trade in commodities and services will total $25 trillion and $7 trillion, respectively. The decline started in the third quarter of the year, when goods sales were around 1% lower than they were from March to May.
Values Dip Down
Although services grew by 1.3% in the third quarter, according to UNCTAD’s global trade update, both goods and services are anticipated to lose value as the year ends.
According to the trade and development update, demand for imported products “proved resilient” through 2022, with trade volumes overall rising by 3%.
While South-South trade dropped during the third quarter, east Asian trade volumes showed resiliency.
Global trade is anticipated to be severely impacted in 2023 overall by “geopolitical frictions, persistent inflation, and decreased global demand,” according to UNCTAD’s research highlights.
Lower economic growth is anticipated until 2023 because of high energy costs, rising interest rates, persistent inflation in many nations, and the depressive effects of the war in Ukraine, among other negative reasons.
Prices of components and consumer items are predicted to stifle import demand and result in a decline in the volume of global trade.
Record-high levels of global debt and rising interest rates raise serious questions about the sustainability of debt putting more strain on the most indebted governments and “amplifying vulnerabilities.”
On the plus side, ports and shipping industries have responded to the COVID-19 pandemic-induced squeeze on the supply chain positively, by putting additional ships into service and essentially resolving port congestion, according to UNCTAD.
The research emphasizes that recently negotiated trade accords like the African Continental Free Trade Area (AfCFTA) and the Regional Comprehensive Economic Partnership in the Asia-Pacific (RCEP) should come to fruition and give some impetus for the whole international system.
Global supply chains are still fraught with risk and unpredictability, but UNCTAD predicted that efforts to create a greener economy will increase demand for environmentally friendly commodities while decreasing demand for fossil fuels and items with a high carbon content.
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