G20 international trade growth eases in Q2-2022, subdued by a strong US dollar Image Credit: Shutterstock

Dubai: A strong US dollar put the brakes on G20 merchandise trade growth in Q2-2022, even though strong travel and transport demand supported overall economic growth.

Measured in current US dollars, merchandise exports and imports increased by 2.1 per cent and 2.6 per cent, respectively, as compared to 4.8 per cent and 6.2 per cent in the previous quarter.

Rising energy prices boosted merchandise trade in North America in Q2, with exports increasing by 10.2 per cent in the US and by 11 per cent in Canada. In the EU, exports recorded modest growth (up 0.3 per cent), while imports grew faster (up 3.0 per cent), largely driven by energy.

Exports contracted in East Asia, as confinement measures continued to disrupt economic activity in the region and inflationary pressures weighed on overseas demand for goods. Exports fell by 4.9 per cent in Japan, 0.4 per cent in China and 2.2 per cent in Korea. High prices continued to drive the value of exports for the leading commodity traders in the G20, with exports expanding in Australia (up 12.5 per cent), Indonesia (up 12.7 per cent) and India (up 7.1 per cent).

While high commodity prices, exacerbated by the war in Ukraine, fueled merchandise trade growth in nominal terms, the slowing growth in value terms partly reflects the increasing value of the US dollar against other major currencies.

Services sector

G20 services trade growth, too, slowed in Q2 in current US dollars. Exports and imports are estimated to grow by 1.1 per cent and 2.2 per cent, as compared to the slightly higher rates recorded in Q1 (2.1 per cent and 2.3 per cent, respectively).

Strong travel and transport supported growth across many G20 economies, while prolonged COVID-19 containment measures weighed on services trade in East Asia. Services trade in North America expanded markedly in Q2, largely driven by a strong rebound in travel.

Conversely, services trade slowed in Europe. Exports contracted by 2.7 per cent in Germany, reflecting a decline in intellectual, financial and business services, while imports rose by 4.6 per cent boosted by travel. France recorded a modest increase in exports (up 1.8 per cent) due to transport and travel, whereas imports contracted by 1.2 per cent. Across East Asia, services trade showed a mixed picture, with growth in travel and transport being partially offset by weak trade in other services. For the first time since Q1 2020, China reported a decline in services exports and imports (down by 8.1 per cent and 3.3 per cent, respectively).