Financial business chart and economic development

While inflation pushed merchandise trade to high levels in the first quarter, GDP growth slowed sharply, according to new data from the Organization for Economic Cooperation and Development (OECD).

In the first quarter, GDP growth for the OECD area slowed to just 0.1% from 1.2% in the fourth quarter of 2021.

For the G7, growth turned slightly negative, the OECD said, with first quarter GDP sliding by 0.1% following a 1.2% increase in the previous quarter. The drop was driven by contractions in the U.S., Japan and Italy, and growth was weaker in Canada and the U.K., the OECD said.

“Changes in net trade, partly due to supply chain disruptions, were the main factor behind the slower or negative GDP growth recorded in the U.K., the U.S. and Japan,” the OECD reported.

Despite the slowdown, output remained above pre-pandemic levels in the U.S., Canada and France, and the U.K. surpassed its pre-pandemic mark for the first time in Q1, whereas Germany, Italy and Japan remained below their pre-pandemic levels.

At the same time, the OECD reported that the value of international merchandise trade for the G20 reached a new high in Q1.

“The increase is largely explained by rising commodity prices, as the war in Ukraine and Covid-19 containment measures in East Asia placed further pressure on the prices of traded goods and on already strained supply chains,” the OECD said, noting that exports and imports increased by 3.6% and 5.8%, respectively.

Trade in services likely slowed in the first quarter, the OECD said, with both import and export activity down from the previous quarter, based on preliminary estimates, “reflecting weaker trade in the transport sector in East Asia and a general slowdown in services trade across most of the G20 economies for which data are available.”