The UN trade facilitation agency has said global trade is set to hit a record high of $32 trillion in 2022, but inflation has reversed some of the gains made in recent months.
The global growth turned negative during the second half of 2022, UNCTAD added.
"Trade in goods and services is expected to reach $25 trillion and $7 trillion, respectively, by the end of the year. The downturn began in the third quarter of the year, with goods trading about one percent lower than from March to May," the UN agency said.
Although services increased by 1.3 per cent in the third quarter, both goods and services are expected to fall in value in the run-up to the end of the year, according to the latest global trade update of UNCTAD.
Demand for foreign goods proved resilient through 2022, with trade volumes increasing by three per cent overall.
Trade volumes of east Asian economies have shown resilience, while South-South trade lagged during the third quarter.
Overall, geopolitical frictions, persisting inflation, and lower global demand are expected to affect global trade during 2023 negatively, UNCTAD said.
Among the negative factors teased out is a lower economic growth forecast through 2023 due to high energy prices, rising interest rates, sustained inflation in many economies and the depressive impact of the war in Ukraine.
Prices of components and consumer goods are expected to dampen demand for imports and lead to a declining volume of international trade.
The UN agency said that record levels of global debt and increased interest rates pose significant concerns for debt sustainability, increasing pressure on those governments most in debt and amplifying vulnerabilities.
However, ports and shipping companies have adjusted to the supply chain crunch provoked by the Covid-19 pandemic, with new ships entering service and port congestion largely resolved, it added, UNB reports.
