The world was rocked in 2022 by Russia’s invasion of Ukraine, punishing inflation, and slackening demand in the U.S. and Europe. That’s dampened expectations for exports and imports in 2023. Global trade growth will slow to 1%, according to the World Trade Organization, because of inflation, higher interest rates, weaker demand in the U.S. and Europe, protectionism, and a leveling-out after recovery from the Covid-19 pandemic. The world will have a difficult time fully recovering from this current slump until it licks inflation. According to the WTO, “energy prices rose 78% year-on-year in August while food prices were up 11%, grain prices were up 15% and fertilizer prices were up 60%.”

 

But global trade, if anything, offers some hope. The $9 trillion global logistics industry has proven that it’s much more resilient than national economies, and practically unbreakable when it comes to delivering a box of watches, apples of shoes from anywhere in the world to anywhere else in the world.

 

Here are Trade Data Monitor’s top 10 ongoing trade trends at the start of 2022:

 

1.  The Post-Covid Trade Bump is Over

 

In 2022, global trade recovered from the Covid-19 slump. When all the numbers are tallied, it’s expected to increase 3.5% over 2021, according to the WTO. Governments handed out stimulus payments to their citizens that they used to buy consumer goods. Now that money is spent and inflation is biting into their budgets, causing a sharp shrinking in spending that’s deflating global trade. The WTO notes that imports will decline in different parts of the world for different reasons. In Europe, higher energy prices due to the war in Ukraine. In the United States, “monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment.” China “continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand.” And for developing countries, “growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress.” Rising energy bills will cause consumers to spend large percentages of their paychecks driving their cars and heating their homes, and less money on shoes, toys and gadgets.

01/03/2023 | John W. Miller | Trade Data Monitor

Part of the fallout from today’s polycrisis – that catchy term encompassing the COVID-19 pandemic, supply chain disruption, growing geopolitical rivalry, food insecurity, energy price hikes, and the cost of living crisis – are assertions by prominent commentators and government officials that globalization has gone too far.

 

One example is a recent speech by Chrystia Freeland, Canada’s deputy prime minister, finance minister and former foreign minister, in which she re-examines the results of spending “three decades building an interconnected global economy.”

 

The view that flows from some of this thinking is that the international footprint of companies must be rethought because executives failed to take proper account of risks evident in today’s fraught world.

 

And the drum beat from certain key policymakers is relentless. Apparent “weaponization” of trade ties by China and Russia has put wind in their sails, as Mark Leonard shows in his 2021 book The Age of Unpeace. This has led to calls for supply chains to be designed with “just in case” considerations in mind rather than with “just in time”.

 

Senior national security officials from Germany, the US, and the UK are on record twisting the knife further – adding an “us versus them” angle to corporate deliberations on supply chain reconfiguration. In a speech in London in July, 2022, the Director of the Federal Bureau of Investigations (FBI), Christopher Wray, said that China posed a “far more complex and pervasive threat to businesses than even most sophisticated company leaders realize.”

12/30/2022 | Simon Evenett | Institute for Management Development