November 20, 2023
World exports of intermediate goods (IGs) fell by 8 % year-on-year in the second quarter of 2023 to USD 2.3 trillion, continuing the slump recorded since last year amid stagnating commodity prices and a marked contraction in global consumer demand due to high inflation and interest rates. The decline affected all regions and most IG product categories.
IGs refer to inputs used to produce a final product and are an indicator of the activity in global supply chains. All regions posted year-on-year declines in IG exports in the second quarter of 2023. Asia recorded a decline of 13 %, followed by Africa (-12 %), North America (-8 %), South and Central America (-8 %), and Europe (-2 %).
In terms of quarter-on-quarter performance, exports of South and Central America increased the most compared to the first quarter of 2023, up 14 %. This was largely due to Brazil’s seasonal exports of soybeans mostly destined for China worth USD 15.3 billion. Brazil also supplied Argentina with USD 1.3 billion worth of soybeans in the second quarter compared to zero a year earlier as Argentina experienced a drought. The sharpest quarterly decline of IG exports among regions, meanwhile, was from North America (-3 % to USD 297 billion) notably vis-à-vis its Asian and European industrial partners. European exports of industrial inputs also decreased by 2 % in the second quarter.
All categories of IG exports declined year-on-year in the second quarter, except for transport parts and accessories which grew 13 %. Notably, China’s exports of lithium-Ion batteries (up 40 % year-on-year) were boosted by accelerating worldwide production of electrical vehicles. Exports of all other IG categories declined: other industrial supplies (-14 %), food and beverages (-9 %), parts and accessories excluding transport equipment (-8 %), and ores and precious stones (-1 %).
Similar to global IG flows, IG trade within regions posted adecline in the second quarter. As in previous quarters, intra-Asia trade – often characterized as “Factory Asia” — was among the most impacted by the reduction in global demand, falling 16 % year-on-year. IG trade within North America was the least affected, with just a 2 % decline. Intra-regional trade also declined for Africa (-37 %), Europe (-4 %), and South and Central America (-4 %).
Most inter-regional exchanges likewise contracted in the second quarter. Nevertheless, European exports to Asia and the Americas grew, with year-on-year increases of 5% and 1-2% respectively. European shipments to Asia were backed by a rise in gold exports.
The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.