The Strategist

UN forecasts global market slowdown

03/27/2023 - 03:30

According to a recent UNCTAD report, global commerce hit a record $32 trillion in 2022.

Corey Seeman
Corey Seeman
Trade in commodities totaled about $25 trillion (an increase of about 10% from 2021), and trade in services totaled $7 trillion (an increase of 15% from 2021). Experts claim that the first half of the year's steady growth, which stayed modest in the second, was what led to the record numbers. Comparing the fourth quarter to the third, there was a roughly $250 billion decline in goods commerce.

Analysts highlight the strong performance of trade in green goods as one of the positive trends seen in 2022. Despite the general slowdown, trade in these goods grew by about 4% in the second half of 2022. Preliminary estimates indicate that in 2022, the overall value of these goods increased by $100 billion to a record $1.9 trillion. The most significant increases in demand were for wind turbines (+10%), eco-packages (+20%), and electric vehicles (+25% by 2021). Prior to now, UNCTAD projected that the market for green products would total $2.1 trillion by 2030.

Despite short-term fluctuations, the organization predicts a long-term slowdown in global commerce (see chart). Current predictions indicate that global commerce in goods will rise by about 1% and in services by about 3% in the first quarter of 2023. (with a slightly stronger growth due to the ongoing recovery of the tourism sector and increased demand for IT services).

Analysts expect that growth will pick up a little in the second half of the year as a result of China's ongoing recovery, updated predictions that the EU and the US will avoid recession in 2023, lower shipping costs (the container freight tariff index in Shanghai, for instance, has returned to pre-pandemic levels and is anticipated to stay low throughout 2023) and a weaker dollar.