Global goods trade to shrink in 2023

Our baseline forecast is now for world trade in goods to decline by 0.2% in 2023, a considerable downgrade from six months ago. The downturn is already visible in Asia in particular, and we expect it will also be driven by weaker imports in the US and Europe. Risks to our baseline forecasts remain skewed to the downside.

What you will learn:

• While coincident indicators suggest trade was still holding up in September, more forward-looking and timely indicators show a more downbeat picture, indicating that annual trade growth will turn clearly negative in the final months of 2022 and in early 2023.
• Asian trade trends are already looking negative, with exports from economies such as Taiwan, Hong Kong, Thailand, and South Korea weakening – in line with the risk indicators we presented in previous research. At a sectoral level, trends are mixed with weakness concentrated in consumer goods, IT goods, and intermediates, partly reflecting the rotation of consumer demand towards services.
• Our baseline forecast for trade looks similar to the downturns seen in global recessionary years such as 1981, 1992, and 2001. One key downside risk relates to investment, which is an import-intensive part of GDP. A much weaker investment outlook than in our baseline would imply a sharper fall in trade too, as in 1975 and 2009.