Trade growth edged up by 0.3% (month-on-month) in February, making that the fifth straight month of expansion according to the latest data from CPB Netherlands Bureau of Economic Policy. The year-on-year growth rate also showed some stabilisation: 6.5% in February and 6.2% in January (from 7.4% in December). Encouragingly, trade volumes remained above-trend in early 2022.

Trade volumes above long-term trend growth in early 2022

Latin America led global trade growth earlier this year (+12.1% in exports alone) followed by the UK (+8%). The former was largely driven by double-digit export growth in Mexico, Brazil, and Argentina; the latter was partly down to operational changes implemented by HM Revenue and Customs in January 2022, and partly a spike in exports across a range of commodities and machinery (chemicals, machinery and electrical equipment, and material for manufacturing). On the other hand, advanced Asian economies like South Korea and Taiwan saw a steep drop in imports. Eastern Europe did record marginal declines in exports and the euro area marginal gains, though it’s important to point out the data below precedes Russia’s invasion of Ukraine.

Global export & import growth in February

Higher oil prices may push supply chain costs higher

Looking ahead, we think the war in Ukraine may have a limited direct impact on logistics and supply chain pressures. But it may translate to higher oil prices in the near term as global sanctions on Russia, the world’s third largest oil producer, continue to bite. Those costs look likely to be passed on to suppliers, putting more pressure on companies globally.