Global trade growth to be subdued in Q1 2023; outlook uncertain: UNCTAD

The UNCTAD (United Nations Conference on Trade and Development) has said global trade in goods is expected to increase by about 1% in the first quarter of 2023, while trade in services is expected to increase by about 3%.

While the economic outlook has improved, global trade growth is expected to remain subdued in Q1 2023, with the possibility of a pickup in the second half of the year. “Overall, although the outlook for global trade remains uncertain, the positive factors are expected to compensate for the negative trends.”

The Geneva-based body, in its latest Global Trade Update, has said that global trade reached a record $32 trillion in 2022. "Those record levels are largely due to robust growth in the first half of 2022. Conversely, trade growth has been subpar during the second half of 2022, especially in the last quarter of 2022," says the UN body.

Trade in goods was about $25 trillion in 2022, up 10% from 2021 and trade in services totalled about $7 trillion, an increase of about 15% from 2021 but its growth turned negative during the last quarter of 2022. Developing countries' trade was particularly weak during Q4 2022, with East Asia and Latin America underperforming, the data shows.

"While manufacturing trade declined, trade in environmentally friendly goods continued to increase throughout the second half of 2022," says the UN report.

For India, the overall trade declined in Q4 2022, with imports dipping 15%, while exports declined 8% on a quarter-on-quarter basis. On a year-on-year basis, the imports rose marginally by 2% but exports plunged by 7%, the UNCTAD data shows.

The data on services are only available with a lag of one quarter. In Q3 2022, the trade in services for most major economies was higher than in Q3 2021, with India reporting a 27% rise in imports and a 30% growth in exports on a YoY basis. On a QoQ basis, the imports of services dipped by 4% but exports increased by 2%.

In Q4, 2022, the global trade in goods declined by about $250 billion relative to Q3 2022, while the trade in services remained virtually constant. But, despite the decline in the value of trade in goods, trade volumes kept increasing during Q4 2022 and are expected to further grow during Q1 2023, the UNCTAD report adds. This suggests a resilient global demand for imported products.

The general decrease in global trade during Q4 2022 hit developing countries harder than developed countries, says the UN body. "During Q4 2022, trade declined across most geographic regions, except for Africa and the Pacific regions, which saw an increase in exports," it says, adding the decline in exports was more substantial for the region comprising the Russian Federation, as well as for East Asia and South America.

In terms of trade trends, the decline in Q4 2022 affected most sectors, but with some exceptions like the trade in the transport and road vehicles sectors saw substantial increases.