Il world trade in the first months of the year it is stopped: has entered a recession and the prospects for the central months are not good. Instead, 2023 should have shown a gradual strengthening of world trade thanks to two factors: the abandonment of the "zero-Covid" policy by China and the consequent reactivation of supply chains; the collapse in the prices of raw materials, and the positive effect that would have resulted on consumption in advanced economies. While both premises have materialised, international trade has so far disappointed. A search for Ref Searches photographs a marked decline in the growth of international trade.
Le cheap imports Americans, which had driven trade last year, have stopped, while those of European countries are contracting. Chinese imports are also weak, against the acceleration of exports after the reopenings, subtracting demand from other economies. Behind the setback in world trade is the slowdown in industrial activity, determined by the effect of higher interest rates on demand, especially for durable and investment goods, and by the shift in consumption to some services items , which had been compressed in the past few years. A situation that especially penalizes the economies most tied to foreign demand. Among the European countries, the greatest difficulties have been felt by theGerman industry, ma anche in Italy signs of slowdown have been observed in the exporting sectors for some months.
Supply chains are back to work
The years of the pandemic have been difficult years for the international exchanges. Several sectors have experienced repeated production interruptions, which in turn have led to problems on the supply side of semi-finished products, with delays in deliveries and exorbitant prices. Then the situation improved after China abandoned the "zero-Covid" policy. Signs of overcoming these difficulties emerge from various indicators, such as the cost of international freight transport, but also those relating to backlogs and material shortages are improving.
During the most acute phases of Covid, companies have also tried to keep stocks of materials higher to meet future needs, with the return of tensions, however, delivery methods are being restored in a short time, also because the higher rates of interest push to minimize liquidity requirements. Among the various aspects, an important point is represented by the increase in the availability of semiconductors, which had been a major bottleneck in recent years.
Prices in 2023 return to the advantage of European countries
The collapse of the prices has also improved conditions on the supply side material prices the first few months, especially energy. In order to mitigate the fall, the OPEC countries have tried to announce cuts in the quantities extracted, without however having significant effects.
Le terms of trade therefore they return to change to the advantage of the countries producing manufactured goods, with respect to those producing commodities. In the coming months, the European economies and the countries of South-East Asia will benefit above all, which in 2022 were more penalized by the surge in gas prices. The US is in a different situation, as producers of oil and gas: the slowdown in international commodity prices will be to their detriment.
But international trade has stopped
Despite improvements in economic conditions on the supply side, the international question has weakened and international trade in goods has stalled. And while trade in goods has come to a halt, the service exchanges are growing, especially following the recovery of the which in the course of 2023 should return close to pre-Covid levels.
Looking at goods alone, according to the analysis, the relative weakness of world trade is in line with the trends of recent years, and reflects the different changes in trade relations between the major areas, including the increase in tariffs introduced by the US on imports from China in 2018 and the widespread introduction of non-tariff barriers and other measures to hinder trade.
However, there are two other factors to consider: the shift in demand towards less trade-intensive components and the change in economic policies, which are holding back the demand for some goods. As regards the first point, it must be considered that services tend by their nature to activate less trade in goods than the production of goods, and this justifies the reduction in the elasticity of trade with respect to world GDP in past quarters. Recently, in many countries the greatest contribution to GDP growth has come from the service sectors, especially tourism and entertainment, as a result of the reopenings of the post-Covid period: a phenomenon that was very intense during 2022, and which now it's running out. As for the second in the sectors most sensitive tointerest rate trends, as in the case of construction (except for Italy) or the consumption of durable goods. Signs of a slowdown in investments are also emerging in emerging countries.
Imports are affected by low demand, exports are slowing down
Overall, the data confirms that the cheap imports some major areas remain weak. In the USA, which had driven world trade last year, the growth of imports has stopped, while in the euro area we have entered a phase of decline. But above all China, which should have been the driving force after the reopening is actually showing modest growth.
Le exports of goods are affected by the weakening of international demand. Recent performance has been virtually stagnant, despite some sectors, such as autos, taking advantage of the improved functioning of supply chains to ramp up production and meet backlogs. The exports of goods of the major countries of the euro area contracted in the first quarter, and those of France e Germany they had also done it in the previous quarter.
Moreover, the qualitative indicators confirm the continuation of this phase of weakening. The fall in orders from abroad is weighing on both the US and the euro area, especially in Germany.
Improve the competitive position of several emerging economies
The last few quarters have also been characterized by large currency swings, especially the dollar. The strengthening of the greenback limited the loss of competitiveness of the Eurozone economies, which had been hit by an increase in production costs as a result of the energy crisis. However, some Asian economies, such as Japan or Korea, recorded losses over the same period depreciations of their exchange rates.
In general, therefore, the major Western advanced economies, in addition to China, are losing competitiveness towards various emerging economies. This aspect could affect the performance of the respective exports in the coming months.
The market shares of European countries have decreased
The value of commodity exports has risen sharply, with all major economies, including China, reporting a loss market shares at current prices. The market shares of raw material producing countries increased, including Russia, which compensated for the problems associated with the embargo with higher prices. Commodity exporters gained market share in 2022, but will lose it in 2023.
The car-producing countries are more penalized, while the UK falls back. Holds the Italian export
Among the advanced economies, the exceptions are the United States, which have increased their market shares: not only because they export oil and gas, but also because of the appreciation of the dollar exchange rate. However, the American trade deficit has not narrowed, also because last year American imports in volume increased more than those of other countries. Among the European countries, the most penalized are those producing cars, such as Germany and France, where, however, the economy has a smaller industrial base than Germany's, and therefore less dependent on export performance. While Italy e Spain have shown greater resistance. Important losses of market share have also characterized the UK and the Japan, also for the problems of the automotive supply chain.
Conclusions
In the light of the foregoing, it is understandable that in recent months the international scenario has provided limited support to the growth of exports from European countries, against unfavorable impulses determined by the trend of the terms of trade. These factors therefore led in 2022 to a large deterioration in the European trade balance.
However, the terms of trade are improving, the trade balances of the Eurozone countries have therefore already started to recover in the first months of 2023. But the picture is still unfavorable from the point of view of exports. At least for a few months, therefore, the international context will still penalize the activity of European industry.
Also for theItalian industry export prospects are shrinking. The decline in American demand and the difficulties of German industry reduce the opportunities for expansion on foreign markets and the recovery remains entrusted to the driving force of and construction.
