In the final quarter of 2022, global exports of intermediate goods (IGs) experienced a significant decline, dropping by 10% to reach a value of $2.3 trillion. This downturn was a direct consequence of various factors, including geopolitical circumstances, commodity shortages, elevated energy prices, and subdued consumption, all of which led to disruptions in global supply chains. The impact of this decrease was felt across almost all regions worldwide.
The WTO reports a significant downturn in the global trade of IGs during the fourth quarter of 2022. The downward trend, which originated in the second quarter, continued to impact global supply chains, with Asia bearing the brunt of the decline.
According to the latest data, the share of IGs in total trade (excluding fuels) experienced a slight dip, falling to 47% in Q4 2022. This is below the 51% recorded during the same period in the previous year and the average ratio of 50% over the last decade.
Asia, known for its robust manufacturing capabilities, witnessed the most substantial decline in IG exports, experiencing a staggering 15% drop year-on-year in the fourth quarter. Hong Kong, China, in particular, suffered a severe blow, with outbound shipments of high-tech components plummeting by 42%, from $13.1 billion to $7.5 billion. The decline in Asia’s IG exports can be attributed to various factors, including global economic conditions and regional challenges.
Europe also felt the impact, as IG exports declined by 9%. This decline was largely attributed to a sharp drop in exports of metals, such as aluminium alloys, which were severely affected by soaring energy costs resulting from the Ukraine conflict. Africa experienced a 14% decrease in IG exports, while North America and South and Central America reported comparatively milder declines of -2% and -0.1%, respectively.
The decline in global IG exports was primarily driven by two product categories. “Parts and accessories (excluding transport equipment)” saw a decline of 13%, while “other industrial supplies” experienced a decrease of 14% year-on-year in the fourth quarter of 2022. Moreover, global exports of ores and precious stones dipped by 3%, reflecting reduced worldwide demand and declining prices, especially for iron ores. In contrast, the “food and beverage” category within IG exports displayed resilience, posting a notable 7% increase.
Trade flows within and between regions also experienced a decline in the fourth quarter. Intra-Asia IG trade dropped by 16%, indicating a slowdown in regional supply chains. Europe witnessed a similar trend, with regional exchanges of industrial inputs decreasing by 10%.
IG exports to South and Central America from all regions were among the hardest hit. China, in particular, curtailed its exports of semi-manufactured metals (iron and steel products) to the region by two-thirds, from $945 million to $321 million in Q4 2022 year-on-year. This reduction can be attributed to China’s efforts to reduce carbon emissions by scaling down crude steel production.
The downturn in global IG exports, as outlined by the fourth quarter information note on trade in intermediate goods, underscores the challenges faced by international supply chains. The report provides valuable insights into the state of global trade and highlights the need for resilience and adaptability in the face of changing economic conditions.