On the 12th, the World Trade Organization (WTO) released a new "Global Trade in Services Data Platform" to provide comprehensive data on trade in services, which shows that in 2023, the total global commercial trade in services will reach 7.54 trillion US dollars, a year-on-year increase of 9%.
Previously, the WTO's just-updated trade outlook data showed that global trade in goods fell by 5% to $24.01 trillion in 2023, with part of the decline due to falling commodity prices such as oil, but strong growth in global trade in commercial services offset most of the decline, and it can be seen that the recovery of international tourism and the surge in digital delivery services have boosted the growth of trade in commercial services.
International tourism continues to recover in 2024
The data shows that although global transport trade fell by 8% to $1.50 trillion in 2023, overall trade in commercial services still recorded strong growth. In 2022, transport accounted for almost a quarter of global trade in services. In 2023, transport exports fell by 25% in Asia and 8% in Europe.
The negative growth in the transport sector in 2023 reflects the decline in sea freight rates to pre-pandemic levels. However, the Red Sea crisis, which began in November 2023, reversed the downward trend in freight rates. The price of 40-foot container shipping on the Asia-Mediterranean route peaked at nearly $6,800 in mid-January 2024 due to vessel diversions, 176% higher than in January 2019, before the pandemic. For the week ended March 28, the freight rate dropped to $5,300.
WTO data shows that the global container spot market freight rate followed the same trajectory, hovering around $3,400 in January and February this year, but falling to $2,725 at the end of March.
The WTO has proposed that freight rates could spike significantly during supply chain disruptions. For example, the bridge collapse at the Port of Baltimore in the United States has created temporary bottlenecks at other ports, which could put upward pressure on freight rates on certain routes. However, the impact of the recent disruption on freight rates has been modest compared to the peak experienced during the pandemic.
On the aviation front, WTO observations show that downside risks to the economic environment and geopolitical tensions have not affected consumer spending on tourism. The pandemic-ravaged international passenger transport industry continues to recover in 2023, with airlines returning to profitability. For example, in 2023, air passenger traffic in the United States increased by 30%, and passenger exports from North America increased by 7%. Before the pandemic, the industry accounted for 44% of U.S. transport exports. According to the International Air Transport Association (IATA), international air connectivity (global flight frequency) will return to about 94% of pre-pandemic levels by 2023.
Looking ahead to 2024, the WTO has suggested that the Olympics and European Football Championships to be held in Europe in the summer, as well as the relaxation of visa requirements by various economies to encourage foreign tourists, could accelerate the recovery of passenger traffic in 2024. At the same time, rail passenger traffic is also expected to pick up, especially in Europe, as there is a growing focus on the sustainability of other modes of transport.
The WTO predicts that on the one hand, air passenger traffic is likely to hit a record high in 2024, and on the other hand, the global shipping industry is likely to continue to develop negatively, and on the other hand, the transport industry closely reflects the trend of global merchandise trade. Shipping rates are expected to grow modestly due to sluggish global demand and excess container capacity, hindering overall growth in transport trade in 2024.
The WTO also predicts that the decline in global inflation will be beneficial to the development of tourism in 2024. Before the pandemic, travellers spent almost a quarter of their trade in services on accommodation, dining, entertainment and other services (such as education) in foreign economies.
In 2023, its value reached $1.51 trillion, up 38% year-on-year and 4% above 2019 levels. Among them, Europe and the Middle East have surpassed pre-pandemic levels in both exports and imports, while Africa's tourism exports have fully recovered (up 5% from 2019).
However, despite the clear catch-up growth in 2023, Asia's tourism exports and imports remain subdued, at 17% and 13% below pre-pandemic levels, respectively.
The insurance industry is growing rapidly
Financial services were heavily affected by exchange rate fluctuations in 2022, but recorded growth of 8% in 2023, with even stronger growth in the European Union at 10%.
Trade in a wide range of professional and business services, R&D, and technical and scientific services grew by 10% in 2023, with Europe being very active (13%) and North America slowing to 3% year-on-year after two consecutive years of double-digit growth.
Insurance services saw the fastest growth in 2023, with a 17% increase, with exports from the EU up 26%, the UK by 29% and Switzerland by 21%. The high growth in the insurance sector reflects the current risk environment, in particular corporate risks from geopolitical tensions, health hazards, supply chain disruptions, and increasing natural disasters related to climate change, which translate into premium growth.
However, it can be seen that while most of the commercial services trade has recovered, the construction industry has not yet recovered from the impact of the epidemic. Labor shortages and the high cost of hard-to-replace materials such as steel have led to the cancellation or postponement of many construction projects in recent years. In 2023, global construction exports will grow by only 3%, still 5% below 2019 levels.
In 2023, the importance of information and communication technology (ICT) services in the overall trade in services continues to rise, reflecting the demand for software, cloud services, machine learning, and cybersecurity, as well as an increase in global internet traffic. Computer services grew by 11% in 2023, with some advanced and emerging economies both exceeding 20%-30% year-on-year growth.
Digital delivery services proliferated
This time, the WTO also conducted special statistics on trade in digital delivery services.
Simply put, digital delivery refers to the process of using digital technology to deliver products, services, or content in a digital form. This includes, for example, digitizing traditional products, such as music, movies, books, etc., or building digital delivery platforms to provide digital products, services, and content.
According to WTO estimates, global digitally delivered services exports will reach $4.25 trillion in 2023, up 9.0% year-on-year, accounting for 13.8% of global exports of goods and services. In 2023, the value of these services – i.e., cross-border transactions over computer networks, including everything from professional and managed services to music and video streaming, online gaming and distance education – is more than 50% higher than pre-pandemic levels.
As mentioned earlier, in 2023, trade in goods has declined globally and in all regions, and in contrast to this, exports of digital delivery services continue to flourish. Among them, Europe and Asia accounted for 52.4% and 23.8% of the global share, respectively, and exports increased by 11% and 9%, respectively. Africa, Central and South America, and the Caribbean grew at a faster pace, outpacing the global average. Digital delivery trade in these two regions accounted for only 0.9% and 1.6% of global exports in 2023, respectively, but they are increasingly leveraging digitally delivered trade in services.
In 2023, business, professional and technical services accounted for 41.2% of global exports of digital delivery services, followed by computer services (20.5%), financial services (16.0%), IP-related services (10.9%), insurance and pension services (5.2%), telecommunication services (2.6%), audiovisual and other personal, cultural and entertainment services (2.1%), and information services (1.5%).
However, the structure of digital services varies widely across regions and economies.
According to WTO statistics, in 2023, the top six major digital delivery services exporting economies are the United States, the United Kingdom, Ireland, India, Germany and China.
(This article is from Yicai)