International commerce soared to a record of $32 trillion in 2022, but goods trade growth is expected to increase by only 1% in the first quarter and remain subdued this year because of a weaker world economy, a UN agency said.

“While the economic outlook has improved, global trade growth is expected to remain subdued in 2023, with the possibility of a pickup in the second half of the year,” according to a report published Thursday by the United Nations Conference on Trade and Development.

Total merchandise goods trade grew by 10% versus the year prior amid strong global demand in the first half of 2022, the report said. Growth began to moderate in the second half — declining by some $250 billion in the fourth quarter compared with the year-earlier period.

Trade in services, meanwhile, is holding up better. It’s projected to increase 3% this quarter, “as demand continues to grow for information and communication technology services, and travel and tourism sectors recover further,” UNCTAD said.

Another positive factor is the growth of trade in environmentally friendly goods, like electric vehicles, non-plastic packaging and wind turbines, the report said. Other drivers include an improved economic outlook in major economies, falling shipping costs, a weakening of the US dollar and high demand for services.

Downside macroeconomic risks to the UN’s projection include rising inflation, high interest rates, growing public debt and a generally precarious geopolitical environment. US-China  decoupling is an additional factor weighing on global growth, the report said, because it may lead to further regionalization of international trade.

[Bloomberg]