Factors that have slowed global trade include tighter monetary policy, reduced fiscal support, and a recovery in the services sector, which contributes less to trade than the goods sector, Fitch said.
The agency said supply chain issues are now no longer a hindrance to global trade, and instead the weakness in trade appears to reflect slowing demand.
“Demand for consumer goods in the U.S. and globally is weakening, reflecting a gradual withdrawal of fiscal stimulus in the U.S., monetary tightening and a rebalancing of demand toward services following the lifting of Covid-19 restrictions.”
Fitch also noted that lower global demand for goods was partially offset by higher demand for services. However, since trade in services only accounts for 22% of total trade, this is not enough to fully buffer the overall slowdown in trade growth.
The agency added that falling demand for commodities had led to a rapid cooling of industrial production and that softer commodity prices such as copper were clear signs of an economic slowdown.