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Ph:DR: Slowdown hits goods more than services
Although world trade reached a record high of $32 trillion in 2022, growth was negative in the last half of the year. But eco-friendly products have defied the trend. World trade reached a record high of $32 trillion in 2022. However, amid deteriorating economic conditions and mounting uncertainty, growth turned negative in the last half of the year and is expected to stagnate. in the first half of 2023.
The good news is the good performance of the “green products” trade, whose growth remained strong throughout the year, according to the latest update of world trade datathe Global Trade Update, published by UNCTAD on 23 March.
Green goods, also called “ecological goods”, refer to products designed to use fewer resources or emit fewer pollutants than their traditional counterparts.
Contrary to the overall downward trend, trade in these green products increased by around 4% in the second half of the year. Their cumulative value reached a record high of $1.9 trillion in 2022, an increase of more than $100 billion from 2021.
Among the green goods that did particularly well were electric and hybrid vehicles (+25%), non-plastic packaging (+20%) and wind turbines (+10%).
“This is good news for the planet,” says Alessandro Nicita, one of the authors of the report“because these goods are essential for the protection of the environment and the fight against climate change”.
This good news comes just a few days after the publication of the latest United Nations climate reportin which scientists issued a “final warning”, saying that rising greenhouse gas emissions are pushing the planet to the brink of irreversible change.
More green growth
UNCTAD expects green industries to flourish as countries step up their efforts to tackle climate change and reduce emissions.
In his recent 2023 technology and innovation reportthe organization predicts that the global market for electric cars, solar and wind power, green hydrogen and a dozen other green technologies will reach $2.1 trillion by 2030, or four times their current value.
According to the Global Trade Update, trends in international trade are expected to be increasingly intertwined with the transition to a greener global economy.
The slowdown affects goods more than services
While imports and exports of green goods have remained buoyant throughout 2022, most products have seen their trade begin to decline in the second half of the year – and the slowdown has continued in course of the fourth trimester.
The report shows that global trade in goods, worth $25 trillion in 2022, fell 3% in the fourth quarter. In contrast, trade in services remained virtually constant, ending the year at $7 trillion.
UNCTAD forecasts for the first quarter of 2023 indicate that world trade in goods will grow by around 1% in value terms. At the same time, trade in services is expected to jump by around 3%, due to growing demand for information and communication technology services, and the recovery of the travel and tourism sectors.
The transport equipment sector saw its trade grow by 14% in the fourth quarter of 2022 – although the result for the year was -6%.
On the negative side, it was energy that recorded the largest decline in the fourth quarter of 2022, with a decline of 10%. The sector nevertheless recorded growth of 24% over the year.
Negative factors weigh on outlook for 2023
The trade outlook remains uncertain amid ongoing geopolitical tensions and concerns over inflation, high commodity prices – especially for energy, food and metals – and the risky mix of interest rates. high interest and public debt.
As of November 30, 2022, more than half of least developed countries and other low-income countries presented a high risk or were already in a situation of over-indebtedness.
The report warns that “the current record levels of global debt, coupled with high interest rates, will continue to negatively affect macroeconomic conditions in many countries.”
The slowdown in global trade in the fourth quarter of 2022 hit developing countries hardest, with imports and exports falling 6% from the previous quarter. This decline is largely due to the 7% drop in exports from East Asian economies.
But positive factors could take over
The situation could improve in the second half of the year, according to the Global Trade Update. He points to positive factors such as the prospect of an averted recession in the European Union and the United States, and a weaker US dollar, which fell nearly 7% between November 2022 and February 2023.
“As most trade is denominated in dollars, a weaker dollar would lead to an increase in demand for traded goods,” the report said.
Concerns about global supply chain disruptions and shipping costs have also eased.
The Shanghai Container Freight Rate Index has returned to pre-pandemic levels and is expected to remain low through 2023. China’s Purchasing Managers Index rose more than 5 points percentage since December 2022, indicating strong activity in the manufacturing and service sectors.
“Overall, although the outlook for global trade remains uncertain, positive factors should offset negative trends,” indicates the report.
