After two consecutive quarterly declines, global trade in goods and services rebounded in January-March 2023. However, the outlook for the rest of the year is grim. The latest Global Trade Update from UNCTAD reveals positive trade growth for goods and services in the first quarter of 2023. Following a slump in late 2022, both the volume and value of world merchandise trade recovered.
During the initial three months of 2023, goods trade rose by 1.9% from Q4 2022, amounting to a $100 billion increase. Global services trade also grew by approximately $50 billion, marking a 2.8% rise compared to the previous quarter.
However, UNCTAD’s current assessment points to a trade growth slowdown in Q2 2023, influenced by downgraded global economic forecasts, persistent inflation, financial vulnerabilities, the Ukrainian conflict, and geopolitical tensions.
The report forecasts a negative outlook for the latter half of 2023 due to prevailing unfavorable factors outweighing positive ones. The concept of “friend-shoring,” which prioritizes trade with politically aligned countries, has been on the rise since late 2022.
Key bilateral trade trends have been shaped by the Ukrainian conflict, the U.S.-China trade decoupling, and Brexit consequences. The report highlights a decline in diversification of trade partners, resulting in greater concentration of major trade relationships.
The report also illustrates the diminishing trade interdependence between the United States and China. The past year and a half has witnessed China becoming relatively less significant as an export market for the United States. Meanwhile, the United States’ reliance on China as a supplier has further decreased during this period. The report reveals a varied merchandise trade growth among major global economies over the past four quarters.
Countries such as Brazil, India, the United States, and the European Union displayed noteworthy increases in both imports and exports.
However, when observed on a quarter-to-quarter basis, trade patterns for major economies were relatively subdued in the period from January to March 2023, with several cases of negative trends. An exception was the substantial export growth witnessed in China and India. Over a year, all regions experienced growth in international trade, except for the Russian Federation and central Asian economies.
Yet, the East Asian region’s growth remained notably below the average.
During the first quarter of 2023, there was a decline in the trade value across most regions on a quarter-to-quarter basis. The Pacific region, North America, and Africa were exceptions, where marginal growth was observed.
Intra-regional trade during the same period displayed similar trends. Of significance, trade within Africa recorded a 3% increase, surpassing other intra-regional trade. The trajectory of global trade over the preceding four quarters was influenced by the energy sector, which saw elevated trade values due to rising prices until experiencing an 11% quarterly decline between January and March 2023.
Several sectors witnessed trade growth, including agri-food products, apparel, chemicals, and road vehicles.
Conversely, trade contracted in office and communication equipment, as well as in the transport sector, where the downward trends persisted into the first quarter of 2023.
For details see UNCTAD Report
