If we look at global trade, second Euler Hermes, production shortages are responsible for 75% of the current contraction in global trade volume, with logistical constraints explaining the rest. After an exceptionally strong performance since the second half of 2020, global trade in goods started to contract last July (-1,1% in the third quarter of 2021. While emerging markets are mainly affected by the current Chinese economic slowdown, advanced economies are suffering from bottlenecks in supply more than an inflated demand. However, the contraction is expected to be temporary, although renewed global Covid-19 outbreaks, China's sustained zero Covid policy and February's Chinese New Year could still affect supply bottlenecks. Looking at the short-term prospects, a weak recovery is estimated in the last quarter of 2021 (+0,8%). Exports from China and Japan showed sequential improvement in October and preliminary November data for South Korea's exports suggest that recent headwinds may be easing. However, global demand dynamics suggest the risk of a double decline in global trade in Q2022 19 amid the Chinese economic slowdown and renewed Covid-XNUMX infections in Europe and the US.
La consumer demand has reached unprecedented levels and is likely to remain above trend, as the excess savings created during the crisis will not be exhausted by 2023. This is primarily explained by the fiscal stimulus in response to the pandemic, which has supported demand rather than supply, especially in advanced economies where governments have deployed fiscal and monetary support equivalent to about 25% of GDP. Although these measures would be phased out, fiscal policies will continue to remain very accommodative USA, Eurozone and China. The replacement cycle of durable goods lasts several years and households are moving towards more sustainable consumption patterns, especially in advanced economies.
Stocks have reached pre-crisis levels and production capacity will increase, thanks to increased investments, mainly in the USA. After destocking at the height of the Covid-19 crisis in early 2020, producers had to restock quickly to meet the rebound in demand in advanced economies (+22%). Last year, input shortages were particularly high in Europe and, to a lesser extent, North America. The electronics, computer, telecommunications and home equipment sectors, in particular, were able to significantly increase their inventories despite semiconductor shortages. Even the automotive industry managed to add inventories, albeit with less success due to the greater difficulties in accessing semiconductors and the higher costs of accumulation of the goods produced. Unlike Europe, the additional supply could address current shortfalls in the US given increases in investment.
At the same time, maritime congestions should be less acute: Global orders for new container ships hit record levels in recent months, accounting for 6,4% of the existing fleet. In the near term, shipping costs are expected to gradually decline from Q2021 2022, in line with ocean freight futures markets, after peaking last September. However, levels will still remain elevated in 17. Another factor that could help unblock shipping bottlenecks is port capacity. The US is planning $25 billion in additional spending on port and waterway infrastructure and $XNUMX billion on airports to address repair and maintenance backlogs, reduce congestion, and drive low-carbon electrification. Europe still lacks large-scale infrastructure investment plans, thus maintaining vulnerability to long-term supply chain shocks, given the dependence on inputs from abroad, especially from Asia.
When it comes to inputs from China, Europe is more at risk than the US when it comes to heavy dependence on intermediate inputs from abroad, due to lack of investment in manufacturing and shipping capacities. The most affected sectors are metals (base metals and fabricated metal products) and automotive (motor vehicles, trailers and semi-trailers, transport equipment). Without increases in production capacity and investments in port infrastructure, normalization of supply bottlenecks in Europe would be delayed beyond 2022 since demand would remain above potential.
Overall, analysts expect that global trade volume will grow by +5,4% in 2022 and by +4,0% in 2023, after +8,3% in 2021. But beware of the increase in global imbalances: the US will record record trade deficits (about 1,3 trillion dollars in 2022-2023), mirrored by a record trade surplus in China (760 billion dollars on average). Meanwhile, the Eurozone will also see an above-average surplus of around $330bn. In terms of export increases, Asia-Pacific will continue to be the main economic driver in the coming years (over $3 trillion in 2021-2023). At a sector level, energy, electronics, machinery and equipment are expected to continue to outperform in 2022, but the main export winner globally in 2023 appears to be the automotive sector.
