The global economy is shaped by current events. What are the top stories from international trade lately? Keep reading to find out.
Top stories from international trade
1. Supply chains back on track
The supply chain is on its way to being “normal.” Ship queues in ports are getting shorter, timely delivery is improved, and freight rates are dropping by up to 75%. The disruptions are easing thanks to weakening demand for goods, especially from China, compared to the previous year. In addition, the situation will be improved even more when new container ships hit the sea in 2023 and 2024.
2. The United States is cutting China off from semiconductor technology
The United States has introduced export controls on state-of-the-art semiconductor technology to China. The restrictions apply to the technology used in supercomputer systems as well as 16 nm and more advanced chips etc. The Biden administration imposed export restrictions to hinder cutting-edge technology development in China, especially in the arms industry. Even other countries cannot sell American technology to China. The export controls have already impacted the semiconductor industry – a few days after they were introduced, it lost more than USD 240 billion
3. Trade ties between Israel and the United Arab Emirates are stronger than ever
Israel’s exports to the United Arab Emirates have increased fivefold compared to last year. Exports from the UAE to Israel also increased to a similar extent. The most popular goods are precious metals and pearls. It is all thanks to the signing of the Abraham Accords, which normalized Israel’s relations with the Arab states. In addition to enhanced trade, the agreement led to establishing embassies and opening tourism borders between those countries.
4. Cross-border trade of digital services will transform the market
In both 2020 and 2021, digital service exports grew 14% year-on-year. IT services have grown, as well as financial, education, and training services. E-commerce stimulates growth, advances innovation, and creates new jobs. Countries far away from the most crucial production hubs significantly benefit from cross-border e-trade. It is discussed at the international level how to prevent barriers in the market and facilitate transactions.
5. Trade growth will slow down in 2023
According to one of the earliest WTO forecasts, the trade growth in 2023 was estimated at 3.4%. The revised forecast was cut to 1%. Higher energy and food costs will dampen import demand. However, if the situation in Ukraine worsens, the new forecast may turn out to be too optimistic.