World trade falls at the fastest pace since the COVID-19 pandemic

Demand for goods exports weakens as a result of higher inflation, rising rates and spending on services.

World trade volumes fell at their fastest annual pace in nearly three years, according to the latest figures that signal rising interest rates are starting to weigh on global demand for goods.

The last digit from the World Trade Monitor, followed a 2.4 percent contraction in June and reinforced evidence that global growth was slowing.

After booming during the COVID-19 pandemic, demand for global goods exports has weakened due to higher inflation, interest rate hikes by central banks in 2022 and more spending on domestic services as economies reopened after lockdowns. In most countries in the world, the volume of trade fell in July.

China recorded an annual decline of 1.5 percent, the Eurozone a contraction of 2.5 percent and the United States of America a decline of 0.6 percent.

Economists now expect eurozone export volumes to be flat for the year, after forecasting a 2 percent expansion earlier in the year.

In addition to weak economic growth, geopolitical tensions have also hit trade.

In its latest economic outlook, the Organization for Economic Co-operation and Development highlighted how trade restrictions have limited export sales since 2018.

U.S. industrial production rose 0.7 percent, raising hopes of a milder slowdown for the world's largest economy, with inflation returning to tolerable levels without triggering a recession. /Telegraph/