Uncertain economy: ‘Green goods’ grew last year despite a slowdown in global trade, says UNCTAD

Trade stagnated for Q1 of 2023, but second half of year shows promise; underdeveloped and developing countries performed poorly

By Himanshu Nitnaware
Published: Friday 24 March 2023
There was a significant slowdown in trade in the Q4 of 2022 owing to deteriorating economic conditions, new concerns of inflationary pressures and zero-COVID policies. Photo: iStock

Global trade declined in the fourth quarter of 2022, despite reaching a record high of $32 trillion the same year. While trade in manufactured goods declined, environment-friendly “green goods” trade continued to increase throughout the second half of the year, according to the United Nations Conference on Trade and Development (UNCTAD).

Trade is expected to stagnate for the first quarter of 2023, the international body has suggested, but the second half of 2023 looks promising. Global trade remained resilient despite geopolitical tensions, the UNCTAD report released March 23, 2022 said. 

Read more: How trade regulations may be opening up a new era of sustainable growth in the Global South

Technology and Innovation Report, 2023 projected the global market for green energy and hydrogen technologies will reach $2.2 trillion by 2023, four times of its actual 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 said.

Trade in goods contributed about $25 trillion in 2022, increasing by 10 per cent over 2021, while trade in services increased by 15 per cent to about $7 trillion. However, Q4 of 2022 saw trade in goods decline by $250 billion in relation to Q3 for the same year. 

Trade among developing countries was particularly weak during Q4 of 2022, with east Asia and Latin America underperforming. 

In India, the trade in goods reduced to 15 per cent in imports and eight per cent in exports. Imports for services declined by four per cent, while exports recorded a growth by two per cent in quarter over quarter. 

There was a significant slowdown in trade in the Q4 of 2022 owing to deteriorating economic conditions, new concerns of inflationary pressures and zero-COVID policies. This stagnated growth in Q1 of 2023, but the outlook is more positive for the second half of the year.

Read more: India seeks permanent solution on fisheries subsidies, public stockholdings ahead of WTO meet

Among green goods, electric and hybrid vehicles saw an increase in trade by 25 per cent, while the non-plastic packaging sector witnessed 20 per cent growth, while wind turbines registered a 10 per cent rise. 

“This is good news for the planet,” said Alessandro Nicita, one of the report’s authors, “As these goods are key to protecting the environment and fighting climate change.”The statement was made through a press release issued by UNCTAD. 

Improved economic approaches in major economies was a positive factor observed in the report. China’s Purchasing Managers Index has increased by over five per cent since 2022, suggesting strong manufacturing and services activity, thereby reducing concerns of disruptions in global supply chains, the report said. 

Economies of the European Union and the United States will avoid recession in 2023, UNCTAD has predicted. The decreased shifting costs have helped to unblock bottlenecks and increase in shipping capacity in the previous year. 

The weakening of the US dollar in 2022 by almost seven per cent between November 2022 and February 2023 resulting in increased demand for traded goods.

Read more: Fight against climate change will worsen existing inequality in global trade: CSE and DTE

Global commercial services are likely to grow in 2023, driven primarily by demand in information and communication technology services, followed by recovery in travel and tourism sectors, the report said.

The prime reason negatively influencing international trade is the geopolitical tensions between Russia and Ukraine. The inflation is predicted to remain comparatively high in many countries due to persisting inflationary concerns. Prices of energy, food and metal commodities are expected to stay above pre-pandemic average. 

Meteorically high global debts with high interest rates will negatively continue to impact macroeconomic conditions of many countries, the report predicted. 

Overall the outlook for global trade remains uncertain but the positive factors are likely to compensate for the negative aspects, UNCTAD concluded. 

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