Column by Kristina Borovikova about the nuances of global trade

Global trade growth slowed sharply in 2023, growing only 0.6%, according to UNCTAD, compared with 5.7% in 2022 and an average of 3.1% in the pre-pandemic years 2015–2019. This is largely the result of mutual trade restrictions between countries (see Kommersant on January 11) and general uncertainty due to conflicts, including the Russian military operation in Ukraine. Also, global trade turnover was seriously constrained by the strict monetary policy of the ECB and the Federal Reserve, which significantly affected the volume of industrial production and capital investment (see, for example, “Kommersant” dated September 12, 2023). The structure of trade also changed: the share of industrial goods in it decreased, while supplies of raw materials and fuel increased. They added problems to trade turnover and difficulties in adapting the transport sector to the dynamically changing rules of the game. Breaks in existing trade links, reorientation of commodity flows, and a noticeable increase in the load on some transport corridors have made it possible to identify bottlenecks in the sector, but have not yet eliminated them. Therefore, it is still expected that in 2024 the growth of global trade turnover will accelerate – but only to 2.4% – and, apparently, this figure will largely be ensured by an increase in trade not in goods, but in services.

It turned out to be more sustainable in 2023, probably partly because it is not subject to logistical restrictions. Data processed by UNCTAD analysts indicate that in 2023 the demand for IT services remained elevated, and the momentum for post-pandemic recovery continued in the tourism sector. Export earnings from tourism in 2023 are estimated at $1.6 trillion, or almost 95% of the $1.7 trillion recorded in pre-Covid 2019. It is expected that the sector will return to its indicators (both in terms of income and number of tourists) in 2024. And although difficulties in adapting the financial sector to the changing conditions of global trade (and therefore payments for services) remain, the restructuring of logistics still looks like a longer-term and costly problem. This factor will likely continue to influence the pace of trade recovery over the coming years. Prospects for a revival in the services market – at least in the short term – appear more encouraging than the performance of the goods market, particularly as a target for future investment.

The Russian Federation, however, traditionally acts as a net importer of services, and this situation did not change significantly with the start of the military operation in Ukraine: according to the Central Bank, as of mid-2023, the balance of trade in services returned to the indicators of the peaceful 2019 – minus $15 billion in six months. A significant part of it is the number of foreign trips of Russians, which have decreased in number but have become more expensive: the Russian Federation is still making a contribution to the global growth of trade in services, but not as much as we would like.