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March 23, 2023   Economic Development

Global trade slowed down in the second half of 2022, but demand for environmentally friendly goods stayed strong, the UN Conference on Trade and Development, UNCTAD, said on Thursday. 

According to UNCTAD’s latest Global Trade Update, trade in “green goods”, which use fewer resources and pollute less, grew by four per cent in the second half of the year, reaching a record $1.9 trillion in 2022.

“This is good news for the planet, as these goods are key to protecting the environment and fighting climate change,” said UNCTAD economist Alessandro Nicita, one of the report’s authors.

Green goods that performed especially well in 2022 included electric and hybrid vehicles, non-plastic packaging and wind turbines.

The findings come days after the Intergovernmental Panel on Climate Change (IPCC) warned in its flagship report that greenhouse gas emissions needed to go down now, and be cut by almost half by 2030, if the goal of keeping temperatures from rising more than 1.5 degrees Celsius above pre-industrial levels is to be achieved.

‘Uncertain’ outlook for 2023

Overall, global trade was worth a record $32 trillion in 2022, but deteriorating economic conditions contributed to a downward trend in the second half of the year.

According to UNCTAD, the outlook for trade remains “uncertain”; the UN body cited geopolitical tensions, high commodity prices and record levels of public debt combined with high interest rates, as reasons for concern. UNCTAD’s forecast says global trade is set to stagnate in the first half of 2023.

In the second half of the year, however, “positive factors” including a weaker US dollar – the main currency used in trade - stabilized shipping costs and fewer supply chain disruptions, could give trade a boost.

Green growth to continue

Despite global economic uncertainties, UNCTAD said that growth in green goods is here to stay, fueled by momentum on climate action. UNCTAD’s latest Technology and Innovation Report released last week characterized this moment as the “beginning of a green technological revolution”.

The report predicted that the market for electric cars, solar and wind energy, green hydrogen and other more environmentally friendly technologies would quadruple in value by 2030 to reach $2.1 trillion.

UNCTAD believes that international trade patterns will more and more closely reflect the green economic transition that’s underway.

Enduring tech gap

UNCTAD also warned that developed countries were seizing most of the economic opportunities related to green technologies, while developing countries were falling behind.

“Missing this green technological wave because of insufficient policy attention or a lack of investment targeted at building skills and capacities would have long-lasting negative consequences,” the UN body’s Technology and Innovation report maintained.

Among its recommendations, the UNCTAD report urged the international community to support emerging green industries in developing economies through global trade rules and technology transfers – so that developing countries could “catch up economically, while helping to protect the planet”.