The global economy is facing multiple challenges that are slowing down trade growth significantly, according to a new report by Fitch Ratings.
The report says that after a strong rebound in 2021 and 2022 following the pandemic, global trade is now losing steam due to factors such as monetary tightening, reduced fiscal stimulus and service sector reopening.
These factors are affecting global demand for goods, which surged remarkably during the pandemic. The report also says that world industrial production is losing pace quickly, and that “services trade is rising, but services production is less globally specialised”.
Fitch Ratings projects that global trade will grow by only 1.9% in 2023, a sharp drop from 5.5% in 2022. This would match global Gross Domestic Product, which it expects to grow by 2%, down from 2.7% last year. The report suggests that trade growth will not surpass GDP in the medium term, as globalization stalls.