IMF report reveals $3.82 trillion in global digital trade for 2022

The International Monetary Fund (IMF) has released a report stating that the value of global trade in digitally delivered products rose to $3.82 trillion in 2022, accounting for a record 54 percent share of services trade. With an 8.1 percent average annual growth rate for almost two decades, it has outpaced other categories like goods.

Digital trade, from software sales to streaming movies, plays a bigger role than ever in the global economy. Yet with many developing countries struggling to fully participate in digital trade, the IMF says it’s now time for policy reforms that promote inclusion, starting with retaining the current tariff-free environment.

Trade in digital media, such as subscriptions to foreign journals, promotes interconnectivity, communication, and the transmission of knowledge and innovation. IMF said that digital marketplaces, such as app stores or freelance programming websites, will foster inclusion by reducing trade barriers for small firms and women-led businesses.

According to the IMF, despite these opportunities, many developing economies, in particular low-income countries, risk falling behind. Reasons include gaps in connectivity, information and communication technology infrastructure and digital skills, as well as the lack of a predictable and transparent legal and regulatory environment.

The WTO moratorium, in place since 1998 and periodically extended, prevents customs duties on electronic transmissions, fostering a stable environment for digital trade. The upcoming WTO Ministerial Conference in February will address the extension of this moratorium.

Concerns about fiscal implications center on potential revenue loss, but studies indicate a minimal impact (0.01 percent -0.33 percent of government revenue).

Research suggests that existing domestic consumption taxes, like value-added tax (VAT), are more effective in generating government revenue from digitized products, with a potential 2.5 times higher yield globally compared to tariffs.