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World Trade Tumbles into Recession

Shipments significantly declined for all major exporting nations during June and July. South Korea and India experienced the steepest drops, with declines of 16% in July and June, respectively. China and Taiwan also saw year-on-year decreases of 9.2% and 10.4% in July. Singapore’s July exports fell by 19.3% compared to the previous year, while Vietnam experienced a 15% decline.

China’s export performance in July gained media attention due to the tense political climate surrounding trade. However, the data from China could be more remarkable, as it is in line with the rest of East Asia and South Asia. Even countries often considered potential alternatives to China’s massive export industry experienced even more significant declines.

The decrease in exports affected all major markets. China provides detailed export data earlier than most countries, showing a downturn in all major export destinations.

In the United States, data from June (the latest available) shows a year-on-year decrease in total imports by 9.9%. The decline in China’s exports to the US aligns with the overall shrinkage in US exports.

Lower prices contribute to the global slump in exports. After experiencing a surge in inflation from 2021 to 2022, with export prices peaking at a 19% year-on-year increase in May 2021, export prices have entered a deflation period over the past three months. According to an economic analysis bureau, export prices have declined by 5% as of May.

Consumer electronics, which saw a boom during the COVID lockdowns, is one of the sectors most impacted by this decline. The semiconductor shortage from 2021 to 2022 has now become a global surplus, leading to significant price discounts for computer chips.

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