It’s been a year of bad news, including record-high inflation, a crippling energy crisis, and a war wreaking havoc on world trade. Worried about the impact of the concurrent crises on the global economy, several international organizations have raised the alarm.
The World Trade Organization, for example, gave a bleak outlook for trade and economic growth in 2023 due to “strong headwinds” of a potential recession. As a result, the trade regulations body also cut its economic growth forecast for that year.
But surprisingly, trade soared at the start of 2022 and stayed strong enough during the rest of the year to reach a record high, a United Nations body said. The value of global trade during this year will rise 12% to almost $32 trillion, the United Nations Conference on Trade and Development (UNCTAD) said in a report released Tuesday.
The boost in trade was attributed to strong growth in the first half of 2022. Trade in merchandise goods, or the value of material goods moving in and out of a country, rose 10% year-over-year, reaching $25 trillion. Services trade also increased by 15% over 2021 to $7 trillion.
A big part of the trade growth was attributed to an increase in prices for energy products, the UNCTAD report said. A combination of higher demand for energy following the pandemic-related lockdowns in mid-2021 and tight oil supply due to the Ukraine war has pushed energy prices up significantly. Europe is particularly bearing the brunt of higher energy costs because it relies heavily on energy imports. In 2020, before the war started, Russia accounted for around 29% of crude oil and 43% of natural gas imported into the EU.
In its analysis of the trade activity of individual countries, the report said that all major economies except Russia performed better compared to a year ago. Russia has faced sanctions and trade restrictions from the U.S. and Europe following its invasion of Ukraine in February, which has hurt its economy.
But even the global economy couldn’t prevent a plot twist when its growth turned negative in the second half of 2022 and into 2023.
In the third quarter of 2022, the trade of goods and services declined by about 1% relative to the same time last year. Some industries have done better than others, such as apparel and office equipment. As the value of trade falls, trade volumes are picking up and are likely to continue growing until the end of 2022, the UN report said.
The trade body expects the inflation-adjusted value of trade in 2023 to “worsen” due to a confluence of factors, including the soaring price of goods, softer economic growth worldwide, mounting global debt, and geopolitical tensions. It did not provide details about the size of the expected decline.
“While the outlook for global trade remains uncertain, negative factors appear to outweigh positive trends,” UNCTAD wrote in the report.
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This story originally Appeared on Fortune