WORLD TRADE EXPECTED TO FALL BY 5% BY THE END OF 2023
The United Nations Conference on Trade and Development (UNCTAD) forecasts a 5 per cent decline in world trade in 2023, with an estimated contraction of $1.5 trillion to below $31 trillion, a far cry from the record of 2022.
In its Global Trade Update of 11 December, the agency announces that the outlook for 2024 remains “highly uncertain and generally pessimistic” due to ongoing geopolitical tensions, escalating debt and widespread economic fragility.
Other elements weighing on trade include weaker demand in developed countries, reduced trade in East Asia, an upsurge in trade-restrictive measures, volatile commodity prices and longer and more complex supply chains, especially between China and the United States.
However, the report points to some positive trends in 2023. These include a slight increase in trade volumes, suggesting a notable downward resilience of global import demand, and a $500 billion increase in services trade. This sector is set to grow by 7% in 2023, thanks in part to the fact that the Covid-19 recovery in the services sector has been spread out over a longer period of time.
In addition, some developing economies, notably Mexico and East Asian countries, have had opportunities for better integration into global supply chains that have been affected by geopolitical concerns.
The report shows that global trade patterns are increasingly influenced by geopolitics, as countries prefer trading partners that are politically aligned, a trend called friend-shoring. This trend has been accentuated since the end of 2022. At the same time, geographical proximity in international trade, nearshoring or far-shoring, has remained relatively stable.
It also highlights a marked increase in trade concentration. “There has been an overall decline in the diversification of trading partners, indicating a concentration of world trade in major trading relationships.”
Source: Logística Profesional