BY Onome Amuge.
The value of global trade soared to a record $7.7 trillion in the first quarter of 2022, gaining about $1 trillion against an estimated $6 trillion recorded in Q1 2021, according to the United Nations Conference on Trade and Development’s (UNCTAD) Global Trade Update published in July.
The significant growth, which reflected a rise of about $250 million compared to Q4 2021, was attributed to surging commodity prices, though trade volumes have increased to a much lower extent.
Though world trade in goods remains strong and expected to stay positive, the UNCTAD noted that trade growth has continued to slow during Q2 2022, as the war in Ukraine is starting to influence international trade, largely through increases in prices.
The report added that rising interest rates and the gradual downturn of economic stimulus packages will likely have a negative impact on trade volumes for the rest of 2022.
However, volatility in commodity prices and geopolitical factors are expected to lead to a lingering uncertainty in trade developments.
The report further noted that trade growth rates in Q1 2022 remained strong across all geographic regions, especially in commodity-exporting regions as the increase in commodity prices lent support to gains in trade, but growth rate was somewhat lower in the East Asia and Pacific regions.
Also, trade in merchandise goods reached about $6.1 trillion, a 25 percent increase from Q1 2021 figures, and a surge of about 3.6 percent compared to Q4 2021.
Similarly, the value of merchandise exports from developing countries to developed countries stood 25 percent higher in Q1 2022 than in Q1 2021, while value of merchandise exports from developed countries to developing countries recorded a 14 percent rise. Merchandise trade between developing countries also grew strongly in the period under review.
Meanwhile, trade in services rose to $1.6 trillion, an increase of about 22 percent compared to Q1 2021, and a rise of about 1.7 percent against Q4 2021.
The UNCTAD report further disclosed that most economic sectors recorded substantial year-over-year increases in the value of their trade in Q1 2022, noting that high fuel prices are behind the strong increase in the value of trade in the energy sector, while trade growth was also strong for metals and chemicals.
On the other hand, trade in the transportation sector and in communication equipment remained below the pre-Covid and post-Covid levels of 2019 and 2021.
According to the report, the evolution of world trade for the remainder of 2022 is likely to be affected by slower-than-expected economic growth due to rising interest rates, inflationary pressures and concerns over debt sustainability in many economies.
The war in Ukraine is also said to be affecting international trade by putting further upward pressure on the international prices of energy and primary commodities.
“In the short term, because of the inelastic global demand for food and energy products, rising food and energy prices would likely result in higher trade values, and marginally lower trade volumes,” the UNCTAD stated.
Other factors expected to have an impact on global trade in 2022 include continuous challenges concerning global supply chains, as well as regionalisation trends and policies supporting the transition towards a greener global economy.