A UN body reported that although global trade surged to a record $32 trillion in 2022, the growth of the goods trade is forecast to increase by only 1% in the first quarter and stay muted this year due to a weaker global economy, as reported by Bloomberg.
Brightened economic outlook
The United Nations Conference on Trade and Development released a report on Thursday that stated, “Although the economic outlook has brightened, global trade growth is likely to remain modest in 2023, with the prospect of a rise in the second half of the year.”
In the first half of 2022, strong worldwide demand led to a 10% increase in total merchandise goods trade over the previous year, according to the report. Growth started to slow down in the second half and fell by about $250 billion in the fourth quarter compared to the same quarter last year.
Meanwhile, the trade in services is doing better. According to UNCTAD, it is anticipated to rise by 3% this quarter as “demand for information and communication technology services continues to grow, and travel and tourist industries continue to recover.”
According to the research, the expansion of commerce in green products like wind turbines, non-plastic packaging, and electric cars is another encouraging development. Additional factors include an uptick in demand for services, a decline in shipping costs, a weaker US dollar, and an improving economic outlook in key economies.
The UN’s projection is subject to negative macroeconomic risks such as rising inflation, high-interest rates, rising public debt, and a generally unstable geopolitical situation. Decoupling between the US and China might further regionalize trade, which would be a drag on the global economy, according to the analysis.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!