GL易BALTRADEUNITEDNATIONSUNCTADUPDATEJuly2022Inflation and rising commodity prices drive global tradeGlobal trade growthThe value of globalThe conflict inTightening policiesdecelerated in Q1trade is fueled byUkraine is starting2022, stll increasingrising commodityto influencefrictions are expectedby about USs 1 tillionprices; trade volumesinternational trade,to negativelyaffectrelativeto thesamehaveincreasedtoalargely throughglobal trade duringperiod of 2021.much lower extent.increases in prices.2022.Risingprices inflate internationaltradeMerchandise trade in values and volumes (Index 2019=100)Index 2019-100Nowcast150Peliminary130Values110VolumesQ2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q220182019202020212022Sowce: UNCTADStat.@UNCTAD@UNCTADtrade ()GLOBAL TRADE UPDATEGlobaltradetrendsandnowcastThe value of qlobal trade increased during Q1 2022, although its growth continued to decelerate. Overall, the value ofglobal trade reached a record level of about USS 7.7 trillion in Q1 2022, an increase of about USs 1 trillion relative to Q12021, and of about USs 250 million relative to Q4 2021.trllion (an increase of about 25 per cent relative to Q1 2021, and an increase of about 3.6 per cent relative to Q4 2021).Trade in services totaled about USs 1.6 trillion (an increase of about 22 per cent relative to Q1 2021, and an increase ofabout 1.7 per cent relative to Q4 2021). Trade growth is expected to remain positive but continues to slow during Q2 2022.ServicesI Annual1 QuartorlyNowcastGoodsI Growh: Groth30%(right axis)Preliminary20%510%40%3-10%-20%Q1Q2Q304Q1Q2Q3Q4Q2Q3Q420182019202020212022NoQuarery growh ithequaer orquarergrothraefsasonaly adjstedalues.Amualgrothrelers tothelastfourquaerSowce; UNCTAD calculations based on nefional statisticsE:ou e sl Zzoz Lo uuad aR (zoz po o saunbyMost of the merchandise trade growth during the last year was nominal. In Q1 2022 the value of trade was about 30 percent higher than the pre-pandemic levels of 2019. By contrast, trade volumes increased to a much lower extent (about 6per cent. The divergence between values and volumes is due to rising commodity prices, especially for energy products,and general inflation. ()GLOBAL TRADE UPDATEGlobal tradeoutlookThe positive trend for international trade may soon come to an end. Rising interest rates and the winding down of economicstimulus packages willikely have a negative impact on trade volumes for the rest of 2022. Volatility in commodity pricesand geopolitical factors will also continue to make trade developments uncertain. Overall, the evolution of world trade forthe remainder of 2022 is likely to be affected by the following factors:Slower than expected economic growthEconomic growth forecasts for 2022 are being revised downwards due to rising interest rates, inflationary pressuresin many economies, and negative global economic spillovers from the conflict in Ukraine. It is likely that global tradewill reflect these macroeconomic trends, with a decrease in trade growth.Effect of the conflict in UkraineThe conflict in Ukraine is putting further upward pressure on the international prices of energy and primary commodities.would likely result in higher trade values, and marginally lower trade volumes.Continuingchallenges forglobal supplychainsRisks and uncertainties remain high for global supply chain operations. COVD-19 mitigation measures may continueto create supply disruptions and global economic uncertainties are likely to make investments riskier during 2022Moreover, long-term trends to shorten supply chains and to diversify suppliers may start to influence internationaltrade in 2022.Trade agreements and regionalization trendsTrade agreements that have recenty entered into force (e-g. the Regional Comprehensive Economic Partnership andthe African Continental Free Trade Area) should provide additional momentum for intra-regional trade. On the otherand geopolitical frictions.Transition towards a greener global economyduring 2022. This would largely depend on the implementation of government policies regulating the trade of carbonproducts required to support greener energy alternativesRising concems for debt sustainabilityGiven the record levels of global debt, concerns of debt sustainability are likely to intensify in the coming quarters dueto mounting inflationary pressures and associated interest rate hikes. The ongoing tightening of financial conditionsis expected to heighten pressure on the most highly indebted govermments, amplifying vulnerabilities and negativelyaffecting investments and intermational trade fiows. a)GLOBAL TRADE UPDATESITTradetrendsinthemajoreconomiesThe import and export trends of some of the world's major trading economies further illustrate the patterms of trade growthduring Q1 2022, Overall, trade in goods in all major economies was well above the pre-pandemic levels of 2019, for bothimports and exports. Negative quarter-over-quarter rates reveal that import trends reversed for Brazil and the RussianFederation dur