The United Nations Conference on Trade and Development (UNCTAD) stated in its “Global Trade Update (March 2023)” that, despite deteriorating economic conditions and growing uncertainties, global trade in goods is expected to rise by about 1% (year over year) in the first quarter (Q1) of 2023 while trade in services is projected to grow by about 3% over the same time period.
Key Facts:
i.Most countries and sectors experienced negative global trade growth.
ii.In 2022, global trade exceeded USD 32 trillion, although its growth started to decline in the last quarter of 2022.
iii.In the fourth quarter (Q4) of 2022, trade in developing countries was weak, with East Asia and Latin America performing badly.
iv.As overall manufacturing trade dropped, trade in environmentally friendly goods increased throughout the second half (H2) of 2022.
v.According to UNCTAD’s nowcasts, trade will remain stagnant in Q1 2023, but the outlook for the second half (H2) of 2023 is more promising.
Downturn in Indian Exports
i.India’s exports fell 7% in Q4 2022 compared to Q4 2021, while imports rose by 2%.
ii.The value of trade in goods for the United States (US) and the European Union (EU), while lower relative to the previous quarter, was higher relative to Q4 2021.
Global Trade Grows Green: Trade of Environmental Goods Outperformed Global Trade During 2022
i.The robust performance of trade in “green goods,” which grew strongly during 2022, was a positive prospect amidst the global trade slump.
- Green goods, also known as “environmentally friendly goods,” are products that are meant to utilize fewer resources or emit less pollution than traditional counterparts.
ii.Contrary to the downward trend, trade in these goods increased by roughly 4% in the H2 2022.
- In 2022, its combined value reached a record USD 1.9 trillion, up by over USD 100 billion in 2021.
iii.Green goods that performed particularly well included electric and hybrid vehicles (+25%), non-plastic packaging (+20%), and wind turbines (+10%).
iv.According to UNCTAD’s recent ‘Technology and Innovation Report 2023’, the global market for electric cars, solar and wind energy, green hydrogen, and a dozen other green technologies would be worth USD 2.1 trillion by 2030, which is four times the value in 2023.
Slowdown Has Greater Impact on Products Than on Services
i.Trade in goods reached nearly USD 25 trillion in 2022, an increase of 10% over 2021, while trade in services reached around USD 7 trillion, an increase of 15%.
ii.Trade in goods fell by roughly USD 250 billion in Q4 2022 compared to Q3 2022 while trade in services was remarkably constant.
iii.Global trade has demonstrated that it is extremely resilient in 2022, despite growing geopolitical tensions (particularly the ongoing war in Ukraine).
- The lifting of zero-COVID policies, worsening economic conditions, and new uncertainties about inflationary pressures have led to a significant trade slump in Q4 2022.
iv.Trade in the transport sector grew by 14% in Q4 2022 – although the result for the year was -6%.
v.The energy sector reported the biggest fall with a 10% decline in Q4 2022, but the sector still recorded 24% growth for 2022.
Factors with an Adverse Impact On the Trade Outlook for 2023
i.Geopolitical tensions, particularly the Russian Federation’s dispute with Ukraine, rising inflation, commodity prices, interest rates, and concerns over present unprecedented levels of global debt all seem to cause adverse impact on global trade performance.
ii.More than half of the least developed and other low-income countries were either at high risk of default or already in debt crisis as of November 30, 2022.
iii.Developing nations were most adversely affected by the global trade downturn in Q4 2022, as both their imports and exports decreased by 6% from the previous quarter.
- The decline was mostly caused by a 7% decrease in exports from East Asian economies.
Positive Aspects
i.Positive aspects highlighted in the Global Trade Update 2023 include the likelihood of an averted recession in the EU and the US, as well as a weaker US dollar (USD), which declined by about 7% between November 2022 and February 2023.
ii.Other favourable reasons that could drive development include an improved economic outlook in major economies such as China, the EU, and the US; lower shipping costs; and an increase in global demand for services.
Recent Related News:
According to the Asian Economic Integration Report(AEIR) 2023: Trade, Investment, and Climate Change in Asia and the Pacific, released by Asian Development Bank (ADB) in February 2023, Greener trade and investment play a major role in tackling climate change in Asia and the Pacific.
About United Nations Conference on Trade and Development (UNCTAD):
Secretary-General – Rebeca Grynspan of Costa Rica [first woman & Central American (Costa Rica) to serve as UNCTAD’s Secretary-General]
Establishment – 1964
Headquarters – Geneva, Switzerland
Member Countries – 195 Members
