Global trade shifts to growth in Q1 but outlook for rest of year poor: UN trade group

ANKARA

Global trade returned to growth in the first quarter of 2023 following two consecutive quarters of decline, but the outlook for the rest of the year is poor, according to a report from the UN trade body.

The figure expanded 2% in January-March from the previous three-month period, the UN Conference on Trade and Development (UNCTAD) said on Wednesday.

Trade in goods grew 1.9% or $100 billion quarter-on-quarter in the three months to March, driven by a revival of economic activity in China, and by an increase in the trade of road vehicles and pharmaceuticals

Global services trade rose 2.8% or $50 billion compared to the last quarter of 2022, partially reflecting the continuing rebound in tourism and travel during the post COVID-19 pandemic.

The UNCTAD said it expected global trade growth to slow in the second quarter of 2023, pointing to recently downgraded world economic forecasts and developments such as persistent inflation, financial vulnerabilities, the continuing war in Ukraine, and geopolitical tensions.

"Overall, the outlook for global trade in the second half of 2023 is pessimistic, as negative factors dominate the positive," read the report.

The Russia-Ukraine war, decoupling of UK-China trade interdependence, and Brexit have played a significant role in shaping key bilateral trade trends in the first quarter, it said.

"Concurrently, there has been a decline in diversification of trade partners, implying that global trade has become more concentrated among major trade relationships," noted the report.

The UNCTAD said over the past year-and-a-half, the US has become relatively less significant as an export market for China while the US' dependency on China as a supplier has dropped even further.