G20 merchandise trade faced a contraction in value during the second quarter of 2023, when compared to the previous quarter, measured in current US dollars. Both exports and imports experienced declines of 3.1% and 2.0% respectively.

This decline can be attributed to subdued global demand and the decreasing prices of commodities, especially energy products. The drop in energy prices had a significant impact on North America’s trade value, leading to reductions of 5.7% and 2.0% in exports and imports in the United States. Similar trends were observed in Canada, the European Union, and East Asia.

In the European Union, Germany and Italy witnessed a decrease in merchandise exports, while France experienced growth, albeit at a slower pace. The United Kingdom’s exports increased by 2.1%, primarily driven by strong sales in machinery and transport equipment. However, the situation was different in East Asia, where merchandise trade contracted sharply.

China’s exports dropped by 5.7%, attributed in part to reduced consumer electronics sales. Japan and Korea faced marked declines in imports (8.1% and 7.9% respectively) due to reduced energy import expenses. Falling commodity prices also impacted exports in Australia and Indonesia.

Additionally, preliminary estimates indicate a notable slowdown in G20 services trade during Q2 2023, as opposed to the robust growth witnessed in Q1 2023. In current US dollars, services exports and imports are estimated to have grown by 0.2% and declined by 0.6% respectively. This shift in growth rates can be attributed to changing trends in various countries.

Overall, challenges faced by the G20 economies in both merchandise and services trade during Q2 2023. The decline in exports and imports reflects the influence of global demand and commodity prices.

The changing trends in services trade point towards a more nuanced scenario where various countries experienced varying levels of growth or decline in their services exports and imports. This could be a precursor of lower global mobility of employees as services (and trade) slow down and uncertainty is more prevalent among the larger economies.