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By Polina Knutsson (Polina.KNUTSSON@OECD.org) & Julia Schmidt (Julia.SCHMIDT@OECD.org), Statistics and Data Directorate (OECD)

Following two years of growth, G20 merchandise trade declined in value terms in Q3 2022, as measured in current US dollars (Figure 1 and 2). Exports and imports contracted by 1.3% and 1.1%, respectively, compared with the previous quarter, prompting OECD Chief Statistician Paul Schreyer to remark:

“It is too early to draw any concrete conclusions, however this latest development in G20 merchandise trade deserves further monitoring as the global economy confronts multiple headwinds, including monetary tightening, receding commodity prices, and cooling demand.”

G20 services trade slowed further in Q3 2022, as measured in current US dollars (Figure 1 and 2). Export growth is estimated to have flattened to 0.3% and imports to have grown by 1.7%. This compares to the higher rates recorded in Q2 2022 (1.3% and 2.3%, respectively), as falling shipping costs weighed on the value of transport services across many G20 economies.

G20 merchandise trade falls for the first time in two years

Falling oil prices weakened merchandise trade in North America in Q3 2022. Exports expanded moderately in the United States (1.7%) and Mexico (2.6%), a marked slowdown relative to the high growth recorded in Q2 2022 (10.1% and 5.6%, respectively). Canadian exports fell by 3.3%. Imports declined by 3.9% in the United States, 1.4% in Mexico and 0.5% in Canada.

In the European Union (EU 27), merchandise exports contracted by 1.5%. German exports fell by 2.3%, despite stronger sales of motor vehicles. In Italy, exports decreased by 3.6%. However, France posted growth in exports up by 1.0%, driven by stronger sales of aircraft and chemicals. Imports in the EU 27 dropped by 0.7%, partly due to lower commodity prices.

In the United Kingdom, exports rose by 0.8%, partially owing to higher shipments of machinery and transport equipment, while imports plunged by 9.9%, linked to lower purchases of machinery and transport equipment. In Türkiye, exports fell by 3.2% while imports jumped by 6.0%.

Merchandise exports remained weak in East Asia. In Japan, exports were down 0.3%, despite the strong growth in shipments of transport equipment and machinery. Korean exports continued to contract (down 1.0%), notwithstanding the robust trade in computer chips, vehicles and parts. But, in China, exports picked up by 0.7%, as increased shipments of electronics and clothing were partly offset by lower sales of steel, textiles and integrated circuits. Soaring gas prices fueled merchandise imports in Korea (up 4.8%) and Japan (up 2.1%). Imports in China were down by 1.7%.

Following several quarters of sustained growth, leading commodity traders in the G20 saw a decline in merchandise exports, partly reflecting cooling demand and falling prices. In Australia, exports were down 7.2%, partially due to lower shipments of coal, metal ores and minerals. Exports dropped by 8.8% in Argentina and 4.0% in Brazil, linked to slower sales of agricultural products. South African exports decreased by 6.7%. Indonesia posted a 0.5% growth in exports, pushed by iron and steel, while imports jumped by 10.6%. Weak sales of textiles and machinery contributed to a sharp decline in Indian exports (down 11.9%).

G20 services trade grows at slower pace

Services trade slowed down markedly in North America in Q3 2022, compared to the previous quarter. In the United States, exports and imports increased by 2.6% and 1.5% respectively, with travel decelerating and business and financial services picking up. Canadian exports flattened (up 0.4%), while imports increased by 3.7%, pushed by travel.

Across Europe, some of the largest services traders recorded negative growth in services exports and rising imports. For the first time since Q2 2020, France recorded a decrease in services exports (down by 1.6%), while higher travel expenditure abroad boosted imports (up 1.5%). German exports also declined (down 1.4%), reflecting lower sales in intellectual, telecommunications and other business services, while imports increased by 2.0%. Similarly, Türkiye reported a plunge in exports (down by 5.9%), while imports rose by 4.5%. In the United Kingdom, both exports and imports decreased by 3.3%.

In East Asian economies, services trade showed a mixed picture. For the first time since the beginning of 2021, Korean exports contracted by 2.0% compared to the previous quarter, driven by a decline in transport offsetting growth in travel and construction receipts. Imports, too, went down by 2.0%, due to a sharp decrease in business and computer services. In Japan, exports flattened (up 0.1%), while a pick-up in travel expenditure abroad fuelled imports (up 13.7%). In China, exports in services rebounded strongly (up by 4.5%), reflecting higher sales in intellectual property, computer and business services, while imports declined by 0.4%.

After a year of steady growth, Brazil’s services exports and imports retracted by 5.2% and 8.8% respectively, due to weaker travel and transport, but also a decline in financial services. Conversely, Australia’s services trade continued to grow, with exports up 6.1% and imports soaring (up 12.3%), both propelled by strong transport and travel.