Trade update forecasts slowing of growth in 2022

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The strong momentum in trade growth enjoyed in 2021 is not likely to be sustainable, UNCTAD has warned.

Following a bounceback of trade growth after the worst of the pandemic last year, the momentum of global goods exchange is likely to slow significantly for the first quarter of 2022, according to a new report.

The United Nations Conference on Trade and Development (UNCTAD)'s Global Trade Update shows that world trade in goods demonstrated strong growth during 2021. Indeed, values reached 25 per cent higher than in 2020 and even 13 per cent higher than in 2019, before COVID-19 struck.

For the final quarter of 2021, all of the world's major trading economies enjoyed a rise in imports and exports that were well above pre-pandemic levels, although growth was higher in commodity-exporting regions.

"The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages," UNCTAD said.

However, the forecast was less optimistic for this year, with UNCTAD predicting only sluggish growth and trade values similar to the final quarter of 2021.

The organization put this down to rising energy prices and the ongoing logistical disruption caused by the pandemic affecting business supply chains.

"Efforts to shorten supply chains and to diversify suppliers could affect global trade patterns during 2022," its report warned.

Furthermore, the document was published just before the Russian invasion of Ukraine, so it may be that forecasts are reduced further in the light of the inevitable disruption to trading relationships that will follow.

The news follows the International Monetary Fund's downward revision of world economic growth forecast for 2022, with the governing body cutting its earlier prediction by 0.5 points.

Meanwhile, there was gloomy news from the World Trade Organization's recently published goods trade barometer too. Its data suggested logistical challenges to international commerce will result in a stalling of growth this quarter and an associated "loss of momentum" in trade.