Torrid pace of global trade may decelerate in 2022, UN says

Global trade in goods and services will likely slow this year from a torrid pace in 2021, as inflation pressures in the U.S. and real-estate instability in China weaken growth prospects in the world’s two largest economies.

That’s among the conclusions in a report released Thursday by the United Nations Conference on Trade and Development, which said international commerce finished last year on a solid note hitting an annual record of $28.5 trillion. The figure represented a 25% jump over 2020 and was 13% higher than the total in 2019.

The pandemic-era preference for home merchandise over intangibles like travel and leisure purchases was apparent, as trade in goods increased 27% from a year earlier while services gained 17%, the Geneva-based agency said.

“The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages,” Unctad’s report said. “As these trends are likely to abate, international trade trends are expected to normalize during 2022.”

The reasons include “persistent inflation” in the U.S. and “concerns related to China’s real estate sector,” according to the report. Record levels of global borrowing also pose a risk because “concerns of debt sustainability are likely to intensify in the incoming quarters due to mounting inflationary pressures,” it said.

The solid trade growth of 2021 brought a less-positive flip side: bigger imbalances. The U.S. trade deficit in goods widened to 5.2% of global merchandise trade compared with 4.3% before the pandemic, while China’s surplus rose to a 4.5% share versus 3.5%, according to Unctad.