Prospects for international trade beyond 2022 remain relatively weak, mmirroring the expected deceleration of economic growth and suggesting a return to the subdued long-term trend prior to coronavirus disease 2019 (Covid-19), according to the United Nations’ trade and development body.
In its Trade and Development report, the UN Conference on Trade and Development (UNCTAD) said that despite the broad uncertainties that lie ahead, it is expected that global trade will grow almost at par with the global economy in 2022 in the range of 2 to 4 percent.
This would represent a sharp deceleration from the 2021 figure, whose current estimates point to a range of 7 to 10 percent in constant prices, depending on whether one considers world exports or imports, the report said.
“Despite such positive development in the first half of 2022, the outlook for international trade is rather grim as the global economy reached an important crossroad around midyear. In the second half of 2022, risks remain mostly tilted to the downside and trade growth is expected to weaken,” it said.
The report attributed this to a combination of different factors, including continued supply chain disruptions, weakened demand tapering demand for consumer durables, unduly aggressive monetary policy, and elevated freight charges.
Such worries seem already visible in inventories and new export orders, both leading indicators for trade, which were subdued in July 2022, it added.
World trade has shown resilience in the first half of 2022 despite the outbreak of war in Ukraine and subsequent sanctions imposed against the Russian Federation, as well as continued lockdowns in China.
Meanwhile, UNCTAD estimates the Southeast Asian region to grow by 4.1 percent in 2022, yet growing inflationary pressures and a subsequent tightening of domestic monetary stances, along with more costly international financing conditions, will dampen activity.
“For 2023, we expect the region’s growth rate to decelerate to 3.8 percent in the context of sluggish growth of global trade and the expected effects of tightened domestic monetary policy, as the region’s vulnerability to financial and exchange rate instability weighs on policymakers’ minds,” it said.