Mitigating factors, according to the authors, include the e-commerce boom, emerging economies taking off; and their shift to value-added goods, services
In a 2022 report on global trade covering 173 countries, one notable finding is that, despite major pandemic and geopolitical challenges, expectations for trade growth were still buoyant at the time of the study.
Taking into considering global trade growth trends, geographic shifts, the mix of products traded, and broader changes in the business environment, the yearly report by DHL and the NYU Stern School of Business, the report notes that (during the period of study) international trade in goods had surged as high as 10% above pre-pandemic levels, even in the face of significant supply bottlenecks that constrained further growth.
According to one of the report’s co-authors, Steven Altman, NYU Stern’s Center for the Future of Management: “The results show how there are still large trade growth opportunities in both advanced and emerging economies and in regions around the world. The trade landscape is shifting and presenting new challenges, but this report strongly rebuts predictions of a major retreat from global trade.”
Due to the war in Russian-Ukraine, trade growth forecasts have been downgraded, but they still call for global trade to grow slightly faster in 2022 and 2023. Also:
- International trade has proved surprisingly resilient through the COVID-19 pandemic, expanding to well above pre-pandemic levels, even as supply bottlenecks constrained further growth.
- Trade is still expected to grow slightly faster in 2022 and 2023 than that in the previous decade, despite forecast downgrades due to the Russia-Ukraine war and global economic situation in the period of study.
- E-commerce sales boomed during the pandemic, expanding opportunities for sellers to access new markets abroad. Forecasts expect strong cross-border e-commerce growth to continue.
- Trade growth is especially important in the present environment because of the power of trade to accelerate economic growth, reduce inflation, and enable countries to access multiple sources of key input.
- Emerging economies grew their share of world trade from 24% in 2000 to 40% in 2012, with China alone driving about half of this increase. But over the past decade, the emerging economies’ share of world trade has “changed very little.”
- Trade growth is spreading out across a wider variety of countries. From 2016 to 2021, China generated one-quarter of the world’s trade growth. Based on the latest IMF forecast, China will still achieve the most trade growth from 2021 to 2026, but its share of global growth “will fall by half to 13%”.
- New poles of trade growth are emerging in South-east and South Asia, and trade growth is forecast to accelerate dramatically in Sub-Saharan Africa. After decades of shifts to the East, “the center of gravity of world trade is poised for a turn to the South”.
- While trade is growing faster in emerging economies, advanced economies continue to generate the largest amount of trade growth. Looking forward, IMF forecasts imply that 55% of trade growth through 2026 will be in advanced economies, while 45% will take place in emerging economies.
- The mix of products traded by advanced versus emerging economies has shifted. Emerging economies are increasingly important importers of raw materials and exporters of sophisticated capital, intermediate, and consumer goods.
- Emerging economies continue to race forward on measures of connectivity, innovation, and leading companies. Future shifts in trade patterns could reflect more the quality rather than the quantity of goods produced in these countries.
Said John Pearson, CEO, DHL Express: “Trade will remain a key driver of prosperity—as it has been for centuries.”