Global trade will grow by 3.0% in 2022, and inflation and supply chain pressure will increase From WTO

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Recently, the World Trade Organization (WTO) released the latest trade data forecast, saying that due to the global situation and the bleak global economic outlook, the global commodity trade volume is expected to grow by 3.0% in 2022, lower than the previous forecast of 4.7%.

The WTO also said that global trade volume will increase by 3.4% in 2023, but these estimates will be more uncertain than usual due to the uncertainty of the current situation.

The WTO said that the most direct economic impact of the crisis was the sharp rise in commodity prices. In addition, maritime trade is now facing interference, which may lead to another shortage and rising inflation in the manufacturing industry.

WTO director general Ngozi okonjo ivala said that under the situation of huge inflationary pressure on basic supply and increasing pressure on supply chain, governments and multilateral organizations must work together to promote trade.

Figure source WTO REPORT ｜ WTO Report

Global trade growth of 3% in 2022

The WTO explained that since there are few exact data on the impact of world conflicts on the economy, WTO economists have to rely on simulation data to make reasonable assumptions about GDP growth in 2022 and 2023.

Under these assumptions, global gross domestic product (GDP) is expected to grow by 2.8% in 2022, down 1.3 percentage points from the previous forecast of 4.1%. In 2023, global GDP growth should rebound to 3.2%, close to the average growth rate of 3.0% from 2010 to 2019.

It should be explained that in the 20 years before the global financial crisis, the growth rate of global commodity trade was about twice that of global GDP, but the ratio of trade growth to GDP growth after the crisis fell to about 1:1 on average.

If the current forecast is realized, the ratio will be 1.1:1 in 2022 and 2023, indicating that the relationship between trade and production will not change fundamentally.

The WTO said that the predicted risks are mixed and difficult to assess objectively. If the current situation ends earlier than expected, Global trade has a certain upward potential, but if the current situation continues for a long time or escalates, there may be significant downward risks.

In addition, in terms of commodities, WTO data show that the rise of global fuel prices predates world conflicts. The price of benchmark Brent crude oil in March was US $118 per barrel, up 38% from the level in January and 81% year-on-year (it is worth noting that the recent daily price of benchmark Brent crude oil fell from the peak of US $128 per barrel on March 8 to US $104 per barrel on April 1).

Unlike oil prices, natural gas prices often vary greatly between different regions. Natural gas prices in Europe rose 45 per cent between January and March to $41.0 per million BTUs, while prices in the United States remained relatively low at about $4.9 per million BTUs.

The WTO said that rising oil prices could reduce global real income and import demand, while rising natural gas prices could have a greater impact on Europe.

The global trade price fluctuates greatly in 2021

Due to large price fluctuations, there is a great difference between the nominal growth data of commodity trade in 2021 and the real growth adjusted for inflation.

WTO statistics show that in 2021, the world commodity trade volume measured by the average value of exports and imports increased by 26%, which means that the average export and import prices jumped by 15% this year. The dollar value of trade in fuels and minerals increased by 59 per cent, agricultural products by 19 per cent and manufactured goods by 21 per cent.

Data show that the year-on-year growth of some products (steel, chemicals and integrated circuits) is stable, while the growth of other products (clothing and machinery) is weak. The trade value of drugs, computers and integrated circuits in 2021 is actually higher than that before the epidemic. This may be due to the high demand for new crown vaccines and the increased popularity of telework. In contrast, trade in automotive products increased by 14% year-on-year in 2021, but still shrank by 4% compared with 2019.

In 2021, the world trade in commercial services increased by 15% year-on-year, driven by the rising demand for transportation services. Tourism exports maintained growth, but remained weak, as global travel restrictions were only eased in some regions. Other service categories, including financial and business services, increased by 12 per cent compared with the previous year. More reading: WTO: the global trade growth forecast in 2017 was raised to 3.6%. WTO: the export of intermediate products continued to grow in the third quarter of 2021. WTO: technical barriers to trade agreement manual WTO: the recovery of global service trade in Q3 in 2021 increased by 25% year-on-year. WTO: the study found that the risk of heart related death in extreme high temperature environment would be three times higher. WTO: it is predicted that the epidemic will lead to a 13% – 32% decline in the global economy. WTO: 2021 world trade report (212 pages) WTO: review of World Trade Statistics in 2021 WTO: 2018 World Trade report WTO: it is expected that the global trade volume will increase by 4.4% in 2018 WTO: the total volume of global commodity trade in the first quarter of 2021 increased by 2.1% month on month and rebounded to 4.3% year on year WTO: accelerating trade digitization to support the opening of a new global chain of financing for small and medium-sized enterprises: the deep impact of RCEP era and China’s opportunities (attached) WTO: 92% of the world’s people live in places with air pollution WTO: in the first quarter of 2021, the global trade in services decreased by 9% year-on-year

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