IGs refer to inputs used to produce a final product and are an indicator of the activity in global supply chains. The worldwide downward trend in IG exports started in the second quarter of 2022 and continued into the fourth quarter. The share of IGs in total trade (excluding fuels), furthermore, dropped slightly to 47 per cent in the fourth quarter of 2022, below the 51 per cent share recorded in the same quarter a year ago and the 50 per cent average ratio for the last decade.
Asia experienced the most significant decline, with a drop of 15 per cent in its IG exports year-on-year in the fourth quarter. IG exports of Hong Kong, China fell most steeply as its outbound shipments of high-tech components (computer memories and integrated circuits) fell by 42 per cent from US$ 13.1 billion to US$ 7.5 billion. IG exports from Europe experienced a 9 per cent decrease, which can be traced to sharp declines in exports of metals such as aluminium alloys, whose production was deeply affected by the rise in energy costs triggered by the war in Ukraine. IG exports of Africa fell 14 per cent , while IG exports of North America and South and Central America (-2% and -0.1% respectively) suffered distinctly less.
The decrease in global IG exports can be partly traced to the product categories “parts and accessories (excluding transport equipment)” and “other industrial supplies,” which declined by 13 per cent and 14 per cent respectively year-on-year in the fourth quarter of 2022. World exports of ores and precious stones, meanwhile, decreased by 3 per cent, reflecting the downward demand worldwide and a decrease in prices, especially for iron ores. Food supply chains, in contrast, remained resilient with IG exports in the “food and beverage” product category rising by 7 per cent.
Similar to global IG growth, trade flows within and between regions posted a decrease in the fourth quarter. Intra-Asia IG trade dropped by 16 per cent, signalling a slowdown in regional supply chains. A similar trend was observed in Europe, where regional exchanges of industrial inputs decreased by 10 per cent. IG exports to South and Central America from all regions were among those that decreased the most. China drastically cut its exports of semi-manufactured metals (iron and steel products) to the region by two-thirds in Q4 2022 YoY (from US$ 945 million to US$ 321 million). This was probably linked to China’s reduction in crude steel production as part of an environmental policy aimed at reducing carbon emissions.
The fourth quarter information note on trade in intermediate goods is available here.
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