A report recently released by the World Trade Organization signals that world merchandise trade is likely to remain weak this year as high interest rates continue to weigh on economic activity. The report shows that world merchandise trade in volume terms inched up by 0.3 percent during the fourth quarter of 2022 and fell by 1.0 percent during the first quarter of this year, compared to the analogous period a year earlier, following year-on-year gains of 5.7 percent during the third quarter of 2022 and 3.4 percent during the second quarter of 2022.

Between the third quarter of 2022 and the first quarter of 2023 the volume of merchandise exports increased in North America (by 0.7 percent) but declined in all other regions, including Africa (by 1.5 percent), Europe (by 1.5 percent), Asia (by 1.9 percent), South America (by 2.6 percent), the Middle East (by 2.8 percent), and the Commonwealth of Independent States (by 8.4 percent). Over the same period, merchandise import volumes fell in South America (by 9.4 percent), Africa (by 3.5 percent), Asia (by 3.4 percent), Europe (by 3.2 percent), and North America (by 1.9 percent).

The report highlights the continued divergence in export volumes among regions that emerged during the pandemic. In the first quarter of 2023, Asia’s exports were 13.3 percent higher than their average level in 2019, while North America’s exports were 4.7 percent higher, Europe’s exports were 4.1 percent higher, South America’s exports were one percent higher, and Africa’s exports were 12.9 percent lower.

In value terms, world merchandise trade fell by two percent from the first quarter of 2022 to the first quarter of 2023, following year-on-year gains of one percent during the fourth quarter of 2022, 13 percent during the third quarter of 2022, and 17 percent during the second quarter of 2022. World merchandise trade in manufactured goods declined four percent in value terms during the first quarter of 2023, while trade in fuels and mining products was five percent lower.

According to the report, prices of primary commodities, particularly food and energy, rose sharply in 2022 following the outbreak of the war in Ukraine, which helped fuel inflation in many economies. While prices had receded from their peaks as of May 2023, they still remained high by historical standards. The WTO adds that “an upturn in container throughput in May 2023 could signal the beginning of a turnaround in trade although the outlook remains clouded by numerous downside risks.”

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