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World trade hit a record US$32 trillion in 2022, but growth slowed in the second half of the year
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“Green goods” defied the slide, as trade in such goods grew in value 4% y-o-y in H2 2022 to a record $1.9 trillion for the year
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Among green goods that sold especially well were electric and hybrid vehicles, which grew 25%, non-plastic packaging, up 20%, and wind turbines, 10%
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UNCTAD expects the market for EVs, solar and wind energy, green hydrogen and a dozen other green technologies to grow fourfold to $2.1 trillion by 2030
World trade is forecast to stagnate this first half of 2023 after a hitting record $32 trillion in 2022, but the United National Conference on Trade and Development says “green goods” defy trade setbacks in other sectors that began in the second half last year.
The silver lining was the strong performance of trade in “green goods”, which grew strongly throughout the year, says UNCTAD’s latest Global Trade Update, published on March 23.
Green goods, or “environmentally friendly goods,” defied the downward trend with trade in such goods up 4% in H2 2022. Their combined value hit a record $1.9 trillion in 2022, over $100 billion higher than in 2021. Trading well were electric and hybrid vehicles, which increased 25%, non-plastic packaging, 20%, and wind turbines, 10%.
“This is good news for the planet, as these goods are key to protecting the environment and fighting climate change,” says Alessandro Nicita, one of the report’s authors.
The good news comes just days after the UN released its latest climate report scientists delivering a “final warning” that rising greenhouse gas emissions are pushing the planet to the brink of irreversible change.
More green growth expected
UNCTAD expects producers of green goods to defy trade declines and boom as countries intensify the fight against climate change and cut emissions.
The organization, in its recent Technology and Innovation Report 2023, projected the global market for electric cars, solar and wind energy, green hydrogen and a dozen other green technologies to grow fourfold to $2.1 trillion by 2030.
“The patterns of international trade are anticipated to become more closely tied to the transition towards a greener global economy,” the Global Trade Update says.
While imports and exports of green goods held strong throughout 2022, trade in most products declined from the second half to the fourth quarter last year. Global trade in goods, worth $25 trillion in 2022, fell 3% in the fourth quarter while trade in services stayed almost constant, closing the year at $7 trillion.
UNCTAD nowcasts for the first quarter of 2023 show global trade in goods will increase about 1% in terms of value. Trade in services is set to rise about 3%, as demand continues to grow for information and communication technology services, and travel and tourism sectors recover further.
Transport equipment trade grew 14% in Q4 2022 although it declined 6% y-o-y. Energy took the biggest fall in the fourth quarter, dropping by 10%. Yet the sector still reported 24% growth for the year.
Negative factors vs. positive factors
The outlook for trade remains uncertain amid ongoing geopolitical tensions and concerns about inflation, high commodity prices especially for energy, food and metals, high interest rates and public debt.
The global trade downturn in Q4 2022 hit developing countries harder as their imports and exports both fell 6% quarter-on-quarter largely due to the 7% drop in East Asian exports.
A pickup is likely in H2 2023 year amid positive factors such as the prospects of an averted recession in the EU and US and a weaker US dollar that fell almost 7% between November 2022 and February 2023.
“As most trade is denominated in dollars, a weaker dollar would result in increased demand for traded goods,” the report says.
The Shanghai containerized freight rate index has returned to pre-pandemic levels and should remain low throughout 2023. China’s purchasing managers index has risen over 5 percentage points since December, indicating strong manufacturing and services activity.
“Overall, although the outlook for global trade remains uncertain, the positive factors are expected to compensate for the negative trends,” the report says.
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