Looking ahead to 2023, here are a few leading predictions on international trade and the import/export sector…

1. Overall Growth Slow Down

The post-COVID trade bump is dead, long live the post-COVID trade bump!

Global trade growth is set to slow to 1%, according to the World Trade Organization, because of inflation, higher interest rates, weaker demand in the U.S. and Europe, protectionism, and a levelling-out after recovery from COVID-19.

2. Import Demand Drop

A key aspect of the above point is import demand is expected to soften as growth slows in major economies for different reasons. In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment.

China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand. Finally, growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries.

3. Supply Chain Security

While the overarching import demand decreases, one thing that won’t change is both major market players and their governments will be looking to reduce exposure to volatile market pricing of commodities and food goods, while building protective measures into supply chains to deal with shortages and rising logistical costs (though there is some positive news on the logistics front).

Companies will be wanting to improve their resilience by mapping out their supply chains and identifying exposure to supply and inflation risks. That way, they can explore ways to mitigate that risk, such as alternative suppliers, potentially from entirely new international territories.

4. Sustainability

Whether you’re a climate change activist or denier the fact is that consumers – especially in the first world – are noting climate events including weather changes and disasters in the media, in documentaries and in business communications, which has continues to change consumer habits as the become “conscious consumers”, and is a trend we’re seeing slowly trickling down to 3rd world markets.

Consumers are wanting to know that their goods are sustainably sourced and that the companies they deal with are putting sustainability at the forefront, with ESG (environmental, social and governance) processes being a major push for businesses, which measures the impact any business is having on society and the environment to increase transparency, reporting, and accountability.

5. China is Losing Export Markets

With ongoing political tensions with China spooking a lot of international companies, moving production to other Asian countries is on the rise. In November, Chinese exports of high-tech products, for example, declined 23.6% to $74.8 billion. Exports of mobile phones were down 33.3% to $11 billion. Exports of toys declined 21.7% to $3.6 billion, and shipments of textiles fell 14.8% to $11.3 billion.

This has a knock on affect to the commodities imports markets due to China requiring less raw materials, with imports of iron ore fell 2.1% to 1.02 million tons over the first 11 months of 2022. Nickel imports shrank 10.1% to 37.4 million tons.