- World trade normalizes and continues to grow despite challenges
- Asia to remain a driving force in 2022
- Supply chain slump and elevated rates will drag through 2022
- Risks ahead but trade fundamentals are still solid
Global merchandise trade is expected to normalize and volumes to grow by 4.1% in 2022 despite continued supply chain frictions and elevated transport costs, according to a new forecast from ING Economics.
The economic and financial analyst estimates that world trade volumes increased by 10.6% in 2021, boosted by the strong rise in demand for consumer goods despite the profound disruption to supply chains due to the pandemic.
“2021 was an exceptional year driven by pandemic-related catch-up effects. For this year, we pencil in a growth rate in merchandise world trade of 4.1%, while we expect world GDP growth to come in at 4.4%,” it said.
For 2022, global trade should not only normalize but continue growing despite still challenging circumstances, the report said.
A shift by consumers back into services will only be moderate in 2022 because of Covid caution. Increased spending on the likes of electronics and furniture might be reduced as consumers resume spending on services while seeing higher energy and food prices.
Overall, however, the preference for goods remains elevated as recent data on consumer spending in the US or the euro zone shows, ING said.
Asia will remain a driving force in 2022. Intra-Asia trade still has strong growth perspectives, following an improvement in Asian industrial production over 2021 as well as significantly higher container throughput.
A slowdown of economic activity in China, however, remains a concern for northeastern Asian industrial economies.
On a global level, ING expects larger flows of oil and oil products alongside the global recovery of road and airline traffic, and for China to remain a major driver of growth for metals, stimulate by the energy transition.
The global automotive production is foreseen to increase by up to 10% and that will create extra trade volumes, although the semiconductor shortage will remain a limiting factor.
Lastly, the implementation of regional trade agreements in Asia and Africa will likely affect regional trade flows positively.
The growth outlook may be dampened by a combination of shipping capacity and container shortages, unforeseen incidents and ongoing labor shortfalls which contributed to spiking container rates last year.
“The pandemic remains an uncertain factor affecting the outlook for 2022. Supply chain troubles and higher shipping costs also continue to pose risks to growth. At the same time, last year also showed this doesn’t necessarily hamper the world from continuing to trade,” ING said.
“We’re optimistic given the economic outlook, a hopefully receding pandemic, and clear evidence of richly filled order books. We expect trade volume growth to hold up well this year, resulting in a more moderate but still sound growth rate for world trade.”
Photo by Victoriano Izquierdo on Unsplash
