World Trade Achieves $32 Trillion In 2022 But ‘Green Goods’ Grow
Despite the economic conditions and rising uncertainties, global trade hit a record $32 trillion in 2022, as growth turned negative in the last half of the year and is set to stagnate in the first half of 2023.
The silver lining was the strong performance of trade in “green goods”, whose growth held strong throughout the year, says United Nations Conference on Trade and Development (UNCTAD’s) latest global trade update published yesterday.
Green goods, also called “environmentally friendly goods”, refer to products that are designed to use fewer resources or emit less pollution than their traditional counterparts.
Defying the downward trend, trade in such goods grew by about four per cent in the second half of the year. Their combined value hit a record $1.9 trillion in 2022, adding more than $100 billion compared to 2021.
UNCTAD noted that the outlook for trade remains uncertain amid ongoing geopolitical tensions and concerns about inflation, high commodity prices especially for energy, food and metals and the risky combination of high interest rates and public debt.
The organisation, 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 reach $2.1 trillion by 2030 – four times more than their value today.
“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, most products saw their trade start to decline in the second half of the year and the downturn continued in the fourth quarter.
The report shows that global trade in goods, worth $25 trillion in 2022, declined by three per cent in the fourth quarter. But trade in services remained almost constant, finishing the year at $7 trillion.
The transport equipment sector saw trade grow by 14 per cent in the fourth quarter of 2022 although the result for the year was -6 per cent.
On the negative side of the spectrum, energy took the biggest fall in the fourth quarter of 2022, dropping by 10 per cent. Yet the sector still reported 24 per cent growth for the year.
As of 30 November 2022, more than half of least developed and other low-income countries were either at high risk or already in debt distress.
The report warns, “The current record levels of global debt, coupled with high interest rates, will continue to negatively affect the macroeconomic conditions of many countries.”
Things could pick up in the second half of the year, the trade update said. It highlights positive factors such as the prospects of an averted recession in the European Union and the United States, and a weaker US dollar, which fell by almost seven per cent 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 said.