General

The United Nations Conference on Trade and development recently released the global trade update report, which showed that in the first quarter of 2023, the global trade in goods and services showed positive growth after two consecutive quarters of decline.

From a positive perspective, the impact of the new crown epidemic on the global energy, food and other supply chains has been alleviated. However, negative factors such as geopolitical conflicts, high inflation, tighter monetary policy and turmoil in financial markets cannot be eliminated, and the road to Global trade growth is still bumpy.

According to import and export data, after the downturn in the second half of 2022, the volume and value of global commodity trade rebounded. Specifically, in the first three months of this year, the global trade in goods increased by 1.9% month on month compared with the fourth quarter of last year, an increase of about US $100billion. Over the same period, the global trade in services also increased by about 50billion US dollars, an increase of about 2.8% month on month.

The latest "barometer of trade in goods" released by the World Trade Organization shows that the prosperity index of Global trade in goods is 95.6, up from 92.2 released in March, indicating that global trade in goods is improving. According to the statistics of import and export data, the automobile product index is 110.8, which remains above the trend level, and the export order index is 102.7, which is slightly higher than the trend level.

Highly sensitive to the global economic climate, South Korea's exports, known as the "Canary" of trade, also showed a recovery momentum. The latest import and export data released by the South Korean customs agency (customs) showed that in the first 20 days of June, the export volume of South Korea increased by 5.3% year-on-year, reaching US $32.895 billion. Since August last year, the export of the first 20 days of a single month has shown an increasing trend again.

Some analysts believe that the rebound in South Korea's export data may be a sign that global demand has begun to rebound. The main reasons for this growth are South Korea's exports to the United States, its steady demand for automobiles and the surge in demand for ships. At the same time, South Korea's exports to the European Union and other places are also gradually growing. Some analysts believe that although these data are encouraging, it is too early to judge that global trade will recover significantly. The relevant economist of the National Bank of Korea in Seoul said that the data showed that the global trade may have reached the bottom, but whether it will fully recover remains to be seen.

Against the backdrop of sluggish world economic growth and increasing risks and challenges, the trade performance of major exporters in the world is further divided. The report shows that the growth of commodity trade in the world's major economies has been uneven in the past four quarters. From a month on month perspective, the trade trend of major economies is weaker from January to March 2023. According to import and export data, Britain's trade performance was the weakest, with its export volume reduced by about 3.1 billion pounds in the first two months of this year.

The report points out that in the first quarter of 2023, China and India's exports performed well. From the perspective of export structure, China's "new three kinds" of products, represented by electric vehicles, photovoltaic products and lithium batteries, have risen rapidly in the world, and their global competitiveness has been significantly enhanced.

In addition, with the exception of the economies of Russia and Central Asia, international trade in all regions has gradually increased, but the growth rate in East Asia is significantly lower than the average level. Import and export data show that from a month on month perspective, in the first quarter of 2023, except for marginal growth in the Pacific region, North America and Africa, the trade volume of most regions declined. Intra regional trade in the same period also followed a similar pattern. It is worth noting that intra African trade increased by 3%, outperforming other intra regional trade.

From the perspective of industry, the global trade trend in the past four quarters has been affected by the energy industry, and the rise in prices in the energy industry has led to an increase in trade volume. From January to March 2023, the industry fell by 11%. Other industries with increased trade include agricultural products, clothing, chemicals and road vehicles. On the contrary, the trade volume of office and communication equipment and transportation decreased, and the downward trend continued until the first quarter of 2023.

The improvement of Global trade data has sent some positive signals about economic recovery, but has not dispelled concerns about future prospects.

UNCTAD predicts that the growth of Global trade will slow down in the second quarter of 2023. Uncertainties such as the recently lowered world economic forecast, persistently high inflation indicators, continued turmoil in financial markets and geopolitical tensions will affect the prospects for Global trade. According to the report, overall, the outlook for Global trade in the second half of 2023 is pessimistic, with negative factors outweighing positive ones.

The WTO predicts that the volume of Global trade in goods will grow by 1.7% in 2023, significantly lower than the average level of 2.6% in the past 12 years. From a global perspective, the inflation level of major developed economies is still high, the continuous increase of interest rates has inhibited investment and consumer demand, and the import has decreased year-on-year for several months. Affected by this, the exports of South Korea, Vietnam and other regions have declined significantly in recent months, and the exports to the United States and Europe and other markets have been depressed.

At the same time, Global trade barriers have increased, trade policy coordination is not as smooth as before, and some so-called "decoupling" and "de risk" practices will also disrupt the stability of the global industrial chain supply chain and affect global economic and trade cooperation. Borg Brend, President of the world economic forum, said that if "decoupling", the world could lose up to 7% to 9% of GDP, which would bring a very high price.

Although there are many difficulties in Global trade, the trend of international cooperation has not been blocked. Recently, the regional comprehensive economic partnership agreement (RCEP) came into force for 15 signatory countries, marking a new stage of full implementation of the free trade area with the largest population, the largest economic and trade scale and the most development potential in the world. "RCEP provides a good opportunity for Member States to open their markets and expand their market scope, and can promote economic and trade cooperation among Member States." RCEP's unified rules help to enhance the cross-border trade volume of ASEAN countries, enhance the resilience of ASEAN's industrial chain, and improve ASEAN's ability to resist external risks "... These voices from member states are the best interpretation of regional open cooperation and mutual benefit and win-win results.

In this era of crisis, people are more dependent on trade than ever before. As WTO director general yvira said, there will certainly be unforeseen crises in the future, but without the stabilizing role of trade, the world will certainly be more difficult to tide over these crises.