Container Cargo ship and Cargo plane with working crane

Tighter financial conditions and weaker demand are translating into a sharp slowdown in global trade and industrial production, Fitch Ratings reports.

The rating agency is now forecasting global trade to grow 1.9% this year, down sharply from its 5.5% growth rate last year.

The projected slowdown aligns with weaker GDP growth and stalled globalization, Fitch said.

Supply chain issues are no longer hampering global trade — instead, the weakness in trade seems to reflect slowing demand, Fitch said.

“U.S. and global demand for consumer goods is weakening, which reflects the phase-out of U.S. consumer-focused fiscal stimulus, monetary tightening and the rebalancing of demand back towards services after the lifting of Covid-19 restrictions,” it said.

Some of the decline in demand for goods is offset by rising demand for services. “But services account for only 22% of total trade and this is not enough to fully cushion aggregate trade growth,” it said.