Global goods trade forecast to shrink in 2023

Global goods trade forecast to shrink in 2023

Downturn will be reminiscent of previous recessions, says Oxford Economics

A container ship is docked at Laem Chabang port in Chon Buri. (Photo: Port Authority of Thailand)
A container ship is docked at Laem Chabang port in Chon Buri. (Photo: Port Authority of Thailand)

The global goods trade will shrink next year in a downturn reminiscent of previous recessions, Oxford Economics said, in a worrying forecast for Asia’s export-dependent economies and beyond.

Goods trade will decline 0.2% next year, with contractions likely starting from the final months of this year, lead economist Adam Slater wrote in a report. That’s a substantial revision down from June, when Oxford forecast that the global goods trade would grow by 3.4% in 2023.

The forecast is among the worst trade outlooks yet for next year and coincides with a growing number of Asian nations reporting shrinking exports.

South Korea said on Thursday that its exports fell the most in two-and-a-half years from a year earlier in November, dragged down by an economic slowdown in China and cooling demand for semiconductors.

Thailand’s exports in October shrank for the first time in 20 months, as tight monetary policy to curb inflation among major trading partners affected purchasing power and economic activity.

Despite the 4.4% year-on-year contraction in October, the dollar value of Thai exports was up 9.1% for the first 10 months of 2022, albeit from a low base the year before.

China’s exports and imports both unexpectedly fell in October and those declines are expected to have deepened in November, according to forecasts for data due to be released next week.

China’s economic slowdown, an energy price shock in Europe, rising interest rates and protectionism are among factors behind the weaker trade look, Slater wrote. US imports are also likely to weaken and weigh on trade, according to the report.

“Our baseline forecast for trade looks similar to the downturns seen in global recessionary years such as 1981, 1992 and 2001,” he said. “Risks to our baseline forecasts remain skewed to the downside.”

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