World trade rose 25 percent year-on-year last year to a record $28,5 trillion after being hit by the Covid-19 pandemic, the United Nations Conference on Trade and Development (UNCTAD) said on Thursday (17.02.2022).
The report highlighted that the positive trend in trade was mainly due to the result of “an increase in commodity prices, easing of pandemic restrictions and a strong recovery in demand due to economic stimulus packages.”
However, as these trends are likely to ease in the coming months, the trend in international trade is expected to normalize this year, UNCTAD said.
He also noted that Global trade is likely to be affected by several factors in 2022These include slower than expected economic growth, ongoing supply chain disruptions, growing concerns about debt sustainability, transition to a greener global economy, trade agreements and trade regionalization.
Last month, the International Monetary Fund cut its 2022 global economic growth forecast by 0,5 percentage point to 4,4% due to rising inflation, supply chain disruptions, the Omicron virus variant and concerns related to China’s property sector. On Wednesday, the Fund said global growth had slowed since it issued its updated forecast in January.
In this regard, UNCTAD noted that global trade patterns are expected to reflect these macroeconomic trends in 2022, with trade growth slowing below expectations.
In recent months, the COVID-19 crisis has caused supply chain bottlenecks and highlighted significant challenges in the logistics sector, with many freight customers struggling to find shipping containers and overcome labor disruptions.
Supply chain blockages have led to congestion and delays at ports, container shortages and a sharp increase in the cost of shipping goods. Rising energy prices have further contributed to supply shortages and skyrocketing shipping costs.
The UN body said that efforts by companies to improve supply chains and diversify their supplier base could also affect global trade patterns.
“Major companies have focused heavily on improving reliability and managing risks in their supply networks, but delays have persisted regardless,” he added.
Trade trends this year are expected to reflect the growing demand for sustainable products. “Such patterns may also be supported by government policies regulating trade in carbon-intensive products,” UNCTAD said.
Concerns about debt sustainability are likely to intensify in the coming quarters due to rising inflationary pressure and could impact global trade in 2022. “A significant tightening of financial conditions would increase pressure on the most indebted governments, amplifying vulnerabilities and negatively affecting investments and the flow of international trade,” the report said.
Regarding trade flows, the report projects an increase in regionalization due to various trade agreements and regional initiatives, as well as the “increasing dependence on geographically closer suppliers.”
Developing countries outpaced rich nations in trade, with developing market exports in the last quarter up around 30 percent on an annual basis, according to UNCTAD. In developed economies they were only 15 percent higher.
According to the report, trade growth rates in the fourth quarter of 2021 remained very strong across all geographic regions, although Growth was highest in commodity-exporting regions, caused by the rise in their prices.
In addition, South-South trade growth was above the world average, with a year-on-year increase of 32%.
Finally, UNCTAD found that, with the exception of the transport equipment industry, all economic sectors experienced a year-on-year increase in the value of their trade during the last quarter.
Due to the COVID-19-induced semiconductor shortage, trade growth in communication equipment, road vehicles and precision instruments was slightly subdued in the previous quarter, UNCTAD noted.World Trade Update)
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