The UN Conference on Trade and Development (UNCTAD) warned that during the second quarter of 2023 there will be a slowdown in global trade activity, in line with persistent inflation, financial vulnerabilities, the war in Ukraine and ongoing geopolitical tensions, which have also lowered the global economic outlook.
In its report more recently, UNCTAD points out that, in general, the World trade prospects for the second half of 2023 are pessimistic“since the negative factors predominate over the positive ones”.
The document indicates that in the first quarter of this year, trade in goods and services grew both in volume and in value after the recession in the second half of 2022.
The first three months of 2023 saw a 1.9% increase in merchandise trade over the last quarter of 2022, totaling about $100 billion. The world exchange of services also increased by some 50,000 million dollars, 2.8% more than in the previous quarter.
The report notes that bilateral trade flows have increased since the end of 2022which reflects the priority managed between countries with similar political values.
He explains that factors such as the war in Ukraine, the decoupling of US-China trade interdependence, and the fallout from Brexit have played a significant role in these bilateral trade trends.
UNCTAD adds that, at the same time, there has been a decreased diversification of trading partnerswhich implies that world trade has become more concentrated among traditional players.
Less US-China trade interdependence
Regarding the decline of commercial interdependence between the United States and China, it shows how in the last year and a half The United States has lost relative importance as an export market for China, In addition, US dependence on China as a supplier has decreased.
The study highlights that in the last year it has been uneven growth in merchandise trade between major economies world.
Brazil, India, the United States and the European Union recorded significant increases in both imports and exports. But in quarterly terms, the trade trends of the major economies were more subdued between January and March 2023, and in many cases negative. The notable exception is the significant growth in exports from China and India.
On an annual basis, international trade expanded in all regions except Russia and Central Asia, and growth in East Asia was below average.
Trade by sectors
UNCTAD noted that world trade trends over the past four quarters were influenced by the energy sector, where rising prices translated into higher trade values, down to a quarterly drop of 11% between January and March 2023.
Other sectors that experienced trade increases were agri-food products, clothing, chemicals and road vehicles.
By contrast, trade declined in office and communication equipment, as well as transportation, where downward trends continued into the first quarter of 2023.
