According to Business Insider, Fitch Ratings is reporting a slowdown in global trade this year after a rapid post-pandemic recovery in 2021 and 2022.
Global trade is projected to grow by just 1.9% this year, well below the 5.5% growth rate in 2022. The ratings agency attributes this to a tightening of monetary policy, a decrease in stimulus, and the end of globalization is approaching.
Projected global GDP growth is only 2% this year, compared to 2.7% last year, and trade growth over the medium term is likely not to exceed GDP growth. Fitch experts believe that this is due to difficulties in globalization.
Among the main reasons for the slowdown in trade are the tightening of monetary policy, the reduction of government fiscal support and the activation of the service sector, which has a smaller contribution to international trade compared to the industrial sector. The recovery of tourism and transport partially offsets the decline in trade.
The logistical problems have largely been resolved and services are less internationally oriented. They make up only 22% of the total trade volume. Decrease in demand for goods due to slower consumer activity leads to lower industrial production, which can be seen in lower prices for commodities such as copper and reduced production in China.