Stronger merchandise trade growth needed for 2023 WTO forecast of 1.7%

Merchandise trade volume in Q1 2023 was down by 1 per cent year on year (YoY).

Year-on-year (YoY) growth in the seasonally-adjusted volume of world merchandise trade was surprisingly strong at 4.4 per cent in the first three quarters last year, before a 2.1 per cent quarter-on-quarter (QoQ) decline in Q4 reduced growth for the year, it said.

Several factors contributed to the trade decline in Q4 2022. High food prices reduced disposable incomes of households in many economies, while high energy prices and rising interest rates raised costs in manufacturing and discouraged investment in industrialised economies, especially in Europe.

Renewed outbreaks of COVID-19 in China also disrupted production and trade in Q4 2022, but the relaxation of pandemic control measures in the country promises to boost growth in 2023.

Merchandise trade growth will need to be stronger in the remainder of the year to reach the WTO’s forecast of 1.7 per cent for 2023, the document commented.

Merchandise trade growth has slowed in most regions since the outbreak of the war in Ukraine and the impact of the COVID-19 pandemic has proven long-lasting.

The performance of merchandise trade across the world was weak toward the end of last year and at the beginning of this year.

Between Q3 2022 and Q1 2023, the volume of merchandise exports rose in North America (0.7 per cent) but all other regions recorded declines, including Africa (minus 1.5 per cent), Europe (minus 1.5 per cent), Asia (minus 1.9 per cent), South America (minus 2.6 per cent), the Middle East (minus 2.8 per cent) and the Commonwealth of Independent States (CIS), including certain associate and former member states (minus 8.4 per cent).

Over the same period, merchandise import volumes declined in South America (minus 9.4 per cent), Africa (minus 3.5 per cent), Asia (minus 3.4 per cent), Europe (minus 3.2 per cent) and North America (minus 1.9 per cent).

Imports of the Middle East were up slightly (0.8 per cent), while those of the CIS were up sharper (17.1 per cent) after plunging earlier in the year following the start of the war in Ukraine.

The divergence in export volumes among regions that emerged during the pandemic has persisted. In the first quarter of 2023, Asia’s exports were still well above their average level in 2019 (up by 13.3 per cent).

Smaller increases were observed over the same time frame in North America (4.7 per cent) and Europe (4.1 per cent), while South America and Europe were mostly unchanged (1 per cent and nil respectively). Export volumes were down strongly in Africa (minus 12.9 per cent) and the CIS region (minus 14.5 per cent).

Import volumes were up between Q3 2022 and Q1 2023 compared to 2019 in all regions except Africa (minus 1.8 per cent).

ALCHEMPro News Desk (DS)