This year has been full of bad news, including record high inflation, a crippling energy crisis, and a war that destroyed world trade. Several international organizations are concerned about the impact of the simultaneous crisis on the world economy and are sounding the alarm, writes Fortune magazine.

For example, the United Nations gives a bleak outlook for trade and economic growth in 2023 because of the “strong head” of a potential recession. As a result, the trade regulator also lowered its forecast for economic growth for this year.

However, according to the UN, trade increased surprisingly sharply at the start of 2022 and remains strong enough to hit a record the rest of the year. The value of world trade this year will increase by 12 percent to almost 32 trillion dollars (nearly 730 trillion crowns), the United Nations Conference on Trade and Development (UNCTAD) said in its current report.

Increased trade is associated with strong growth in the first half of 2022. Trade in goods, or the value of tangible goods moving in and out of a country, rose 10 percent year-on-year to $25 trillion (570 trillion crowns). ). Trade in services also increased by 15 percent over 2021 to 7 trillion dollars (just under 160 trillion crowns).

Europe’s problem – energy dependence on Russia

Much of the increase in trade was due to rising prices for energy products, according to the UNCTAD report. A combination of higher energy demand following a pandemic-related shutdown in mid-2021 and oil supply constraints resulting from the war in Ukraine pushed energy prices up significantly.

Higher energy costs are mainly felt by Europe, as it is largely dependent on energy imports. In 2020, before the start of the war, Russian production accounted for around 29 percent of oil and 43 percent of natural gas imported into the EU.

In its analysis of trade activity by country, the report said that all major economies, except for Russia, performed better than last year. Russia has faced sanctions and trade restrictions from the US and Europe after February’s invasion of Ukraine, which has hurt its economy.

But even the global economy has not been able to prevent plot twists from happening as growth turns negative in the second half of 2022 and into 2023.

In the third quarter of 2022, trade in goods and services fell by around 1 percent compared to the same period last year. Some sectors fared better than others, such as clothing and office supplies. While the value of trade is decreasing, its volume is increasing and is likely to grow until the end of 2022, said the UN report.

Inflation-adjusted trade values ​​are expected to “worse” in 2023 due to a combination of factors, including sharp increases in commodity prices, weakening global economic growth, rising global debt and geopolitical tensions. The report did not provide details on the expected rate of decline.

“While the outlook for global trade remains uncertain, negative factors appear to outweigh positive trends,” written by UNCTAD.