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.