Global Trade Predictions for 2023
The latest report from the United Nations Conference on Trade and Development (UNCTD) paints a gloomy picture of trade trends for 2023. Coming off the back of a significant growth period in early 2021, trade in goods and services peaked to a high of 26% and 24% respectively Q1 2022, growing from a dismal 1.3% and negative -3% the same time 2020. Despite the year ending on a record high for trade volume, the second half of the 2022 slowed and is expected to worsen into 2023.
But why?
As Sention has highlighted previously, several interconnected threats converge to create complex challenges for networks, organisations and interlinked businesses.
Some of these include:
- On-going political tensions and geo-political changes within the Asian Pacific region. Examples include negotiations with China, leadership changes in Malaysia and the debt crises in Sri Lanka.
- The on-going war in the Ukraine (with negative economic impacts to people and goods).
- The ongoing pandemic (Omicron waves, health infrastructure, pharmaceutical costs and Long Covid).
- Economic stress (higher energy costs, rising interest rates and sustained inflation).
While ports and shipping companies have now adjusted to the challenges brought on by the pandemic, shipping rates remain high and timeframes are slower due to on-going uncertainties with supply chains operations.
What about the green economy?
The demand for a greener economy will see a shift in global trends and demand for environmentally sustainable products will increase. This global trend may expand to impact third party supplires along the supply-chain network. Compliance and accountability for such products may also become a necessary consideration.
So, what are we likely to see in 2023?
The World Trade Organization (WTO) predicts import demand will soften as growth slows in major economies, influenced by trade agreements, inflation and monetary policies. Growing import bills for fuel, food and fertilisers are accounting for increased debt in developing countries with the latest WTO GDP projections ranging between -2.8% to 1% for 2023.
Uncertainty in global growth is likely to continue due to these on-going interconnected variables. Reflect now on potential risk scenarios and take action to reduce significant pressure on your business.
For more information and insights go to www.sention.com.au and subscribe to Sention-iQ for detailed risk scenarios under Geo-political and Supply Chain profiles.