International trade growth is forecast to stagnate this year as countries have raised interest rates to combat surging inflation, leading to a worldwide economic slowdown, says global logistics company DHL.
According to the Global Connectedness Index 2022, the global trade volume in goods reached 10% above the pre-pandemic level in the middle of last year, despite advanced decoupling between the US and China.
“The decoupling between these two countries has not yet led to a broader fragmentation of global flows between rival blocs of countries,” the report noted.
John Pearson, chief executive of DHL, said the index data clearly debunks the perception of globalisation reversing as international flows have been resilient amidst headwinds, such as the pandemic and the Russia-Ukraine conflict.
A recent forecast by the International Monetary Fund indicated trade volumes would grow only 2.4% in 2023, down from a pre-war prediction of 4.9%. S&P Global projected real trade growth in goods at 0.6%, with positive trade growth during the second half of the year.
“The slower trade growth is largely caused by countries raising interest rates to combat a surge in inflation.
Other factors that weighed on trade growth include high energy costs and Covid-19 outbreaks in China, which led to some supply disruptions,” according to the report.
Source: Bangkok Post
