Global trade will grow by 1.9% in 2023

The latest Economic Outlook released by Crédito y Caución shows a slight improvement in its forecast for global trade growth. The credit insurer expects world trade in goods to grow by 1.9% in 2023. Although this rate will be a slowdown from the 3.2% recorded in 2022, it is 0.4 percentage points higher than expected six months ago. 

This improvement in the trade forecast is in line with higher expected import demand from the United States and the European Union, which will avoid negative growth in 2023 as a whole. China's reopening will not only boost its imports, but also reduce trade costs and pressures in the global supply chain. 

Among the factors that continue to weigh on trade growth, higher financial costs due to monetary tightening have a particular impact on trade in capital goods, where exports from the United States, Germany and Japan declined in the first months of 2023. 

In addition, foreign direct investment flows are under pressure. 

Third, the post-pandemic shift in demand towards services has weighed on the evolution of trade in goods. This trend is aggravated by energy price increases, which hamper production in countries such as Germany. 

Finally, the trade collapse between the European Union and Russia continues and, although there are no signs of decoupling from China, there is a fall in its trade with the United States, especially in the ICT sectors.

If we look at the evolution of trade by sector in 2022, the sectoral winners of the pandemic are now losing share and vice versa. We see the substitution of demand for goods by demand for services, especially tourism and transport. 

Countries such as the United Kingdom, France, Spain and Italy have recovered the ground lost during the pandemic, but not the United States, Japan, Australia or Thailand, largely due to the effect of China's restrictions. Normalisation towards 2019 consumption levels generates commercial potential in the automotive, aerospace and tourism sectors. However, semiconductors, which saw their demand soar during the pandemic, are seeing a reversal of the trend. Advanced Asian economies with interests in these sectors, such as South Korea and Taiwan, are bearing the brunt. By region, positive growth was recorded in 2022 in most regions with the exception of China, due to its zero COVID policy, and Eastern Europe, which was more affected by the war in Ukraine.