June 27, 2023
According to the United Nations Conference on Trade and Development (UNCTAD)’s Global Trade Update, trade growth for goods and services in the first quarter of 2023 was positive. Trade in goods rose by 1.9% from the last quarter of 2022, adding about $100 billion and global services trade went up by approximately 2.8% relative to the previous quarter, adding about $50 billion. However, given the reduced economic forecasts, persistent inflation, financial vulnerabilities, Ukraine war, and geopolitical tensions, UNCTAD nowcast predicts a slowdown in global trade growth, which has resulted in a pessimistic outlook for the second half of 2023.
The geographical proximity of international trade has remained relatively unchanged over the last five quarters, with “friend-shoring” expanding since late 2022. Key bilateral trade trends have been impacted by the Ukraine War, the decoupling of US-China trade interdependence, and Brexit. The fall in the US and China’s reliance on one another in terms of trade has been ongoing, with the US becoming less important as an export market and less reliant on China as a supplier.
During the last four quarters, growth in global merchandise trade has been mixed among major world economies, with considerable gains in Brazil, India, the US, and the EU. Between January and March 2023, trade patterns were muted; however, China and India saw strong increases in exports.
With the exception of the Russian Federation and the economies of Central Asia, all regions realized growth in international trade annually. However, growth in the East Asian area has been below average. The value of trade decreased in most regions during Q1 2023; however, the Pacific region, North America, and Africa experienced a slight increase quarter-over-quarter. Intra-regional trade followed similar trends during the same period with African trade outperforming other intra-regional trade with a 3% increase.
The energy sector, which influenced global trade trends over the past four quarters, was impacted by growing prices, which increased trade values until an 11% decline during Q1 2023.
Clothing, chemicals, road vehicles, and agri-food goods were among the other sectors that saw a rise in trade. However, there were declining trends in office and communication equipment as well as transport, which persisted into Q1 2023.
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