Annus horribilis. The year 2023 has been one of the most disastrous years in memory for world trade, which experienced a decline in both value (5%) and volume (1.2%). This was stated yesterday by the World Trade Organization (WTO) in its outlook report.
To give you an idea, there have only been a few negative exercises in the last fifty years: the oil crises of 1975 and 1981, the internet bubble of 2001, the great financial crisis of 2009 and the pandemic. Except for the Covid parenthesis, the exchanges closed last year with the worst results in the last fifteen years.
In addition, there is another striking fact: trade growth in recent years continued to maintain its momentum, although somewhat slower than in the 1990s, when imports and exports increased at a rate that was double that of world GDP. In 2023, however, the relationship between the two variables was even negative: that is, global wealth increased more than trade.
What happened? There is a conjunctural aspect. Demand for goods was weaker. “Manufacturing consumption is sensitive to cyclical factors. When real income decreases, consumers prefer to postpone the purchase of durable goods such as vehicles and appliances.” The rise in prices and interest rates had a negative impact.
In 2023, import demand was particularly weak in Europe, where the impact of rising energy prices and inflation was most intense. “Europe was mainly responsible for the fall, due to its notable participation in world trade (37%), affected by fluctuations in the costs of basic products in the last two years,” indicates the study.
Regarding whether or not there is deglobalization, the WTO has denied it repeatedly. And yesterday too. He prefers to talk about “fragmentation.” The organization previously estimated that a complete breakup of the world into geopolitical blocs could reduce global GDP by 5%. A marked fragmentation would limit this cut to 1%. At the moment, we are not in this hypothesis.
Still, some facts indicate that there is a change in trend. One is reorientation and rapprochement. “Exchanges and investments are increasingly shifting towards economies that are considered friendly.” As an example, last year US imports of information, computing and telecommunications services from North America itself came to represent 23% of the total, compared to 15.7% five years earlier. On the contrary, imports of the same type and in the same period of services to the US from Asian countries fell to 32%, after having represented 45%.
The other aspect is that exchanges between Washington and Beijing are clearly declining. Since 2018, total bilateral trade between the planet's two largest economies has grown 30% more slowly than their trade with the rest of the world.
To this we must add that trade in intermediate goods, the best indicator of value chains on a global scale, fell by 6% in 2023. Its participation in exports fell from 58% in 2022 to 54%: the world is closing a little more.
Among the aspects that invite optimism, the prospects for the next two years are positive, with a rebound in trade of 2.6% this year and even 3.3% in 2025. But the WTO introduces caveats. “Geopolitical tensions may limit the scope of the recovery. “Food and energy prices could experience sharp increases again.”
On the other hand, the evolution of trade in the services sector was encouraging, with global exports increasing by 9% in 2023 thanks to the tourism boom. Spain remains the 19th economy in the world that sells the most abroad and has gained a tenth of market share. Not so horrible.
