East Asia shows resilience although geopolitical tensions, high energy prices, rising interest rates, and persistent inflation are expected to constrain global trade next year.
Global trade should hit a record $32 trillion for 2022, but a slowdown that began in the second half of the year is expected to worsen in 2023 as geopolitical tensions and tight financial conditions persist, according to the latest Global Trade Update, published by UNCTAD on 13 December.
Despite the war in Ukraine and the lingering impact of the pandemic, trade in both goods and services have seen strong growth this year. Trade in goods grew 10% from last year to an estimated $25 trillion, due in part to higher energy prices. Services were up 15% to a record $7 trillion.
But the UNCTAD report warns that the slowdown during the second half of this year points to tougher conditions in 2023.
“Economic growth forecasts for 2023 are being revised downwards due to high energy prices, rising interest rates, sustained inflation in many economies, and negative global economic spillovers from the war in Ukraine,” the report says.
“The ongoing tightening of financial conditions is expected to further heighten pressure on highly indebted governments, amplifying vulnerabilities and negatively affecting investments and international trade flows.”
East Asian trade shows resilience
In the third quarter of 2022, the value of global trade in goods was well above the levels of same period in 2021 for both developing and developed countries.
However, on a quarter-by-quarter basis, trade declined in all geographic regions – except for East Asia, which showed considerable resilience.
“When East Asian economies are excluded the more significant decline in developing countries’ trade is remarkable,” the report says.
The report provides indicators for trade performance at the country level, along with analysis and data for major economic sectors.