The value of global trade increased to a record $7.7-trillion in the first quarter of the year, which translates to a year-on-year increase of about $1-trillion, the United Nations Conference on Trade and Development (Unctad) notes in its ‘Global Trade Update’ report, which was published on July 7.

The report says the growth, which represents a rise of about $250-million quarter-on-quarter, was fuelled by rising commodity prices, as trade volumes have increased to a much lower extent.

Though expected to remain positive, trade growth has continued to slow during the second quarter of this year.

“The war in Ukraine is starting to influence international trade, largely through increases in prices,” the report says.

It adds that rising interest rates and the winding down of economic stimulus packages will likely have a negative impact on trade volumes for the rest of the year.

Volatility in commodity prices and geopolitical factors will also continue to make trade developments uncertain.

TRADE GROWTH STRONG

According to the report, trade growth rates in the first quarter remained strong across all geographic regions, although somewhat lower in the East Asia and Pacific regions.

Export growth has been generally stronger in commodity-exporting regions, as commodity prices have increased.

Meanwhile, trade in merchandise goods reached about $6.1-trillion, an increase of about 25% year-on-year, and a jump of about 3.6% quarter-on-quarter.

The value of merchandise exports from developing countries was about 25% higher than in 2021. For comparison, this figure is about 14% for developed countries.

Merchandise trade between developing countries also strongly grew during the quarter.

Trade in services grew to about $1.6-trillion, an increase of about 22% over last year, and a rise of about 1.7% on the prior quarter.

SUBSTANTIAL INCREASES

The report shows that most economic sectors recorded substantial year-on-year increases in the value of their trade in the first quarter.

High fuel prices are behind the strong increase in the value of trade in the energy sector. Trade growth was also above average for metals and chemicals.

By contrast, trade in the transportation sector and in communication equipment remained below the levels of 2021 and 2019.

SLOWER ECONOMIC GROWTH

The report says the evolution of world trade for the remainder of this year is likely to be affected by slower-than-expected economic growth owing to rising interest rates, inflationary pressures and concerns over debt sustainability in many economies.

The report states that the war in Ukraine is affecting international trade by putting further upward pressure on the international prices of energy and primary commodities.

In the short term, because of the inelastic global demand for food and energy products, rising food and energy prices would likely result in higher trade values and marginally lower trade volumes.

Other factors expected to influence global trade this year are continuing challenges for global supply chains, regionalisation trends, and policies supporting the transition towards a greener global economy.