Global trade reached a record high of $28.5trn in 2021, but the United Nations warns that it will begin to slow in this quarter as economic growth forecasts are being revised downwards.
The UN Conference on Trade & Development (UNCTAD), in its latest global goods and services trade update released on Thursday, said that during the fourth quarter of 2021, trade in goods increased by almost $200bn to about $5.8trn, a record.
During the same period, trade in services rose by about $50bn to reach $1.6trn, a value it said was just above pre-pandemic levels.
Overall, on a year-over-year basis, trade in goods strongly outperformed trade in services, with increases of about 27% and 17%, respectively.
However, UNCTAD cautioned that the trade growth was largely a result of rises in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages.
“As these trends are likely to abate, international trade trends are expected to normalise during 2022,” it warned.
Global trade, it said, is likely to be affected by slower-than-expected economic growth, continuing challenges for global supply chains, trade agreements and regionalisation trends, government policies regulating the trade of high-carbon products, and, given the record levels of global debt, rising concerns about debt sustainability.
UNCTAD pointed out that the International Monetary Fund has cut its world economic growth forecast for 2022 from 4.9% to 4.4% because of persistent inflation in the US and concerns related to China’s real estate sector.
“It is likely that global trade trends will reflect these macroeconomic trends, with lower-than-expected trade growth,” it said.
Despite this, UNCTAD noted positive emerging trends for developing countries, where growth in the trade of goods was stronger than for developed countries.
The exports of developing countries during the quarter were around 30% higher than the corresponding period in 2020; for developed countries, the figure was 15%.
“Trade growth between developing countries (South-South) outpaced global trade during the fourth quarter of 2021, with an increase of about 32% relative to the fourth quarter 2020, and with an increase of about 38% when excluding East Asian economies,” UNCTAD said, adding that these patterns were similar to those that were emerging in pre-pandemic times.
Trade growth rates during the fourth quarter remained “very strong” across all geographic regions, although lower in Europe, North America and East Asia.
“Export growth has been generally stronger in commodity-exporting regions, as commodity prices have increased,” it said.
On a sector-by-sector level, with the exception of transport equipment, all economic sectors saw a substantial year-on-year increase in the value of their trade during the quarter.
The strong increase in the value of trade of the energy sector was attributed to high fuel prices, while metals and chemicals trade growth was also above average.
However, UNCTAD noted that trade growth in communication equipment, road vehicles and precision instruments was subdued as a result of the global shortage of semiconductors during the quarter.
