Africa’s trade volumes slowed sharply by 2.7 percent in 2022 from 10 percent in 2021, following global output deceleration occasioned by challenging environment, according to a new trade report by Afreximbank.
But the general price increases more than offset the losses in volumes, giving impetus to the value of global trade which grew by about 12 percent.
According to the report, Africa’s merchandise trade expanded by 20.9 percent in 2022 despite the difficult global environment. The region’s trade was supported by rising commodity prices and increased demand for Africa’s energy from Europe.
The report launched at the ongoing 30th annual meetings of Afreximbank by Oramah, President and Chairman of the Board of the bank, highlighted the fact that a combination of supply chain disruptions, trade restrictions, heightening global tensions, and tightening monetary policy in response to record-high inflation, contributed to major shifts in investor sentiments and led to steep increases in commodity prices during the first half of the year 2022.
However, commodity prices declined sharply in the second half owing to softening demand in a context of sharp global growth deceleration especially in China and Europe, the leading drivers of global trade.
The report also showed that the value of intra-African trade reached $193.17 billion, growing by 18.6 percent in 2022. Intra-African trade, which has been given a boost through the implementation of the African Continental Free Trade Agreement (AfCFTA), is clearly set to redefine Africa’s economic fortunes for the future.
The report reaffirms the belief that by lowering barriers to trade in goods and services, the agreement is providing great incentives for those looking to do business across the continent and reduce reliance on the global value chains while setting a new direction for the development of regional value chains. In this context, the AfCFTA, which represents a significant milestone in the journey towards addressing Africa’s trade imbalance, is seen as the best economic recovery tool for the continent.