General

On March 23, the United Nations Conference on Trade and Development (UNCTAD) released a report titled "Global Trade Update", stating that positive factors may prevail in world trade in 2023. It is expected that world trade may stagnate in the first half of 2023, but the downturn in world trade may improve in the second half.

According to the analysis of the report, the world trade volume reached a record level of 32 trillion US dollars in 2022. However, due to the adverse global economic situation and rising uncertainty in 2022, following the negative growth of global trade in the second half of last year, many negative factors have placed heavy pressure on the global trade outlook in 2023 and increased uncertainty. Specifically, the geopolitical situation remains tense, the shadow of inflation looms, high prices of commodities, especially energy, food, and metals, and high interest rates and public debt risks persist. As of November 30, 2022, more than half of the least developed countries and other low-income countries were either facing a high-risk debt crisis or were already in debt distress.

The report says that slowing economic growth has a greater negative impact on trade in goods than on trade in services. Although the import and export of green goods remained strong throughout 2022, the trade of most of these products began to decline in the second half of the year and continued to decline in the fourth quarter. According to the report, the global trade in goods in 2022 was $25 trillion, down 3% in the fourth quarter, but the trade in services remained almost unchanged, reaching $7 trillion by the end of the year.

The report believes that the current record global debt level, coupled with negative factors such as high interest rates, will continue to have a negative impact on the macroeconomic situation of many countries. In the fourth quarter of 2022, the global trade downturn had a greater impact on developing countries, with both imports and exports falling by 6% compared to the previous quarter, mainly due to a 7% decline in exports from East Asian economies.

The report also pointed out some positive factors conducive to the recovery of trade, such as the prospect of the European Union and the United States avoiding their economic recession, and the weakening of the US dollar. As most global trade is denominated in US dollars, a weaker US dollar will lead to increased demand for traded goods. In addition, concerns about global supply chain disruptions and rising shipping costs have eased. The Shanghai container freight index has returned to its pre epidemic level. Since December 2022, China's purchasing managers' index has risen by more than 5 percentage points, indicating strong manufacturing and service sector activity. Overall, although the global trade outlook remains uncertain, positive factors are expected to offset negative trends.

The latest forecast from the United Nations Conference on Trade and Development for the first quarter of 2023 shows that global trade in goods will increase by about 1% in value terms. At the same time, as the demand for information and communication technology services continues to grow, as well as the further recovery of the tourism industry, global trade in services will increase by approximately 3%.

The report also shows that although the trade volume of the transportation equipment industry decreased by 6% throughout 2022, it increased by 14% in the fourth quarter. Although trade in the energy sector increased by 24% in 2022, it experienced a significant decline of 10% in the fourth quarter.

In addition, the report points out that global green commodity trade has risen against the trend and performed well, with a strong growth momentum throughout last year, becoming a bright spot in world trade.

According to the report, contrary to the overall downward trend of global trade in 2022, the volume of green goods trade increased by about 4% in the second half of the year, with a cumulative value of a record 1.9 trillion US dollars, an increase of more than 100 billion US dollars compared to 2021. Among green goods, electric and hybrid vehicles (up 25%), non plastic packaging (up 20%), and wind turbines (up 10%) performed particularly well. In response, experts from the United Nations Conference on Trade and Development evaluated that, given the importance of green commodities for protecting the environment and addressing climate change, strong growth in trade in such commodities is good news for the planet. The report also mentions that the latest United Nations climate report released recently issued a "final warning" on global climate change, stating that increasing greenhouse gas emissions are pushing the planet towards the brink of irreversible change.

The United Nations Conference on Trade and Development predicts that as countries increase efforts to address climate change and reduce emissions, green industries will flourish and more green growth will occur globally. It is expected that by 2030, the global market share of electric vehicles, solar and wind energy, green hydrogen, and a dozen other green technologies will reach $2.1 trillion, four times the current market value. It is expected that international trade patterns will be more closely linked to the green transformation of the global economy.