Global economic growth will be 2.4% in 2023, and global trade will grow by 1%

The global economy will grow by 2.4% in 2023, but global trade will grow by only 1%, a new report from the United Nations Conference on Trade and Development (UNCTAD) suggests. In fact, the review is an attempt to substantively answer the question of why low growth rates will continue over the coming years. UNCTAD insists that one of the main reasons is the gap between developed and developing countries, which makes it impossible not only to achieve ambitious (including climate) goals, but also to effectively restore the global economy. However, not only economic but also political gaps have negative effects – primarily the intensification of confrontation between China and the United States.

Global trade in goods and services will grow by just 1% in 2023, well below global GDP growth (expected at 2.4%), with trade in goods “hovering around zero,” says UNCTAD’s trade and development review, and In the near future, such low growth rates will continue. The main period of trade liberalization ended in the 90s, but in the next three decades, national regulations, not tariffs, changed, which led to an asymmetry in the trade gains of developed and developing countries, the authors of the report record.

Due to the consequences of the COVID-19 pandemic and the Russian military operation in Ukraine, the economic gap between countries has only increased: public debt in developing countries is growing noticeably faster than in developed countries, the former are lagging behind the latter in terms of the rate of investment growth, and in the speed of energy transition, etc. d. The IMF also pays attention to the latter circumstance, which is explained by the complexity of restructuring energy markets in developing countries. But disruptions, and especially further fragmentation of the global energy market, will cost developing countries much more than developed ones, according to a new review of the organization. According to IMF estimates, the severance of “previous ties” in commodity markets threatens developing countries with losses of 1.2–2% of GDP.

One of the main stories unfolding in the energy market and affecting developing countries is the replacement of Russian gas with American LNG in Europe. Let us remember that we are talking about replacing only part of the volumes that “fell out” due to the confrontation – consumption was largely reduced thanks to the mild winter (see Kommersant on May 3). Recognizing the success of Europe’s reorientation towards LNG, UNCTAD for the first time also records its negative consequences: first of all, rising prices (+15% per year), which forced developing countries, including Bangladesh and Pakistan, to reduce purchases.

Overall, UNCTAD notes that although commodity prices continued to decline in 2023, they are still above pre-war levels. The organization reminds that the main reason for the fall in prices that began in 2022 was a decrease in demand caused by a combination of factors: among them, the harsh “synchronous” tightening of monetary policy by global central banks, the expected slowdown in global economic growth, and the slow recovery of China. We note, however, that the specialized IEA and OPEC record a “return” in demand for energy resources: moreover, according to their estimates, the supply of oil is no longer keeping up with it (see Kommersant on September 13 and 14). This is largely due to the growth in Chinese demand: for example, in August its imports reached 52.8 million tons of oil – 20.9% more than in July, and 30.9% more than in August 2022, according to Chinese data. customs.

Part of the UNCTAD report, however, is devoted to describing the gaps not on an economic basis, but on a political one. We are talking mainly about the trade war between China and the United States, the long-term effects of which have yet to be assessed, but the short-term ones turned out to be peculiar – American imports from China in 2022 were at a historical maximum and amounted to $564 billion – due to supplies that were not affected increased duties, UNCTAD notes.

Kristina Borovikova, Tatyana Edovina