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The “initial shockwaves” of the Russian invasion of Ukraine to global trade in goods appear to have stabilised, according to the Kiel Institute for the World Economy’s Trade Indicator.
April’s growth figures are the first comparable increase in global trade since January, before the outbreak of the war, figures compiled by the Germany-based economic research firm showed.
Containers stuck
At the same time, The National reports, global container ship congestion remains high with about 11% of all goods shipped worldwide stuck.
According to the Kiel Trade Indicator, US exports were up 5% month-on-month in April, while imports were expected to fall slightly by 1.4%.
The EU saw growth in both exports, up 0.7%, and imports, up 1.1% in April.
With China grappling with fresh Covid-19 restrictions, is exports and imports were expected to have stagnated and trade remained at March levels, the Trade Indicator showed. Imports declined by 0.9%.
Data for Russia indicates its trade may be bottoming out in April after severe slumps in the past three months.
Compared with March, exports are likely to decline only moderately at -1.6%, while imports could increase by 2.3%.
Russian diversion
Vincent Stamer, head of the Kiel Trade Indicator, explained: “Russia may be starting to substitute imports from Europe with imports from Asia.
“This is indicated by the fact that the port of Novorossiysk in the Black Sea has recently seen a significant increase in the number of container ships arriving, whereas the port of St Petersburg, which is involved in European trade, continues to record declines.”
A World Trade Organisation (WTO) report in April forecast that the Russia-Ukraine crisis could lower global gross domestic product growth by 0.7-1.3%, bringing it to 3.1-3.7% this year. Global trade growth in 2023 is expected to be 3.4%.
UK slowdown
In the UK, the Bank of England has warned the UK faces a “sharp economic slowdown” this year as it raised interest rates 1% from 0.75%, their highest level since 2009, reports the BBC.
Inflation is at a 30-year high and set to hit 10% by the autumn as the Ukraine war drives up fuel and energy prices.
The Bank's Monetary Policy Committee (MPC), which sets rates, said there had been “a material deterioration in the outlook” for UK economic growth.
Policymakers now expect the UK economy to shrink rather than expand in the final three months of this year. It is also expected to contract by 0.25% in 2023, down from its previous forecast of 1.25% growth.
The MPC believes unemployment will rise as businesses start to struggle, climbing from 3.6% this year to around 5% in 2024.
China backs zero-Covid
Meanwhile, China has signalled that it will not dial down its strict Covid restrictions, which have been blamed for disrupting global trade.
Chinese top officials have reaffirmed their commitment to President Xi Jinping’s zero-Covid strategy and issued a forceful warning against criticism of the strict measures as the country faces growing backlash at home, reports the FT.
A statement released after a meeting of China’s Politburo Standing Committee on Thursday – over which Xi presided – said: “We should adhere unswervingly to the general policy of ‘dynamic zero-Covid’ and oppose all words and resolutely oppose all distortions, doubts and denials.”
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