According to Fitch Ratings, global trade is now slowing down after a rapid post-pandemic recovery in 2021-2022. In addition, the ratings agency notes a winding-up process of globalization.
Analysts anticipate global trade growing by 1.9% this year, far below a 5.5% rise recorded in 2022. Global goods demand is being weighed down by monetary policy tightening, fading fiscal support, as well as stalling globalization.
Global GDP growth is projected to stand at only 2% in 2023, down from last year’s 2.7%. At the same time, global trade volumes are expected to remain low in the medium term.
The main factors contributing to a slowdown in trade growth are major central banks’ steps to tighten monetary policy, reduced government financial aid, and increased activity in the services sector. The latter factor less promotes trade than expanding manufacturing capacity does, Fitch noted.
Analysts estimate that the services sector is less internationally specialized than the manufacturing one. At the moment, services account for only 22% of total trade. However, waning globalization acts as an obstacle to the world economy.
In addition, experts point out a prolonged decline in demand for a number of goods amid cooling consumer spending. In the long term, this may trigger a recession in industrial production, the agency summed up.
