Global trade is expected to rebound in 2024 after contracting in 2023, the positive outlook partly fueled by increasing demand for environmental goods, especially electric cars, according to the United Nations Conference on Trade and Development (UNCTAD).
The UNCTAD’s latest “Global Trade Update” forecasts the continued improvement in global trade for this year, the outlook anchored on moderating global inflation, improving economic growth forecasts, and rising demand for environmental goods, particularly electric vehicles.
The report said global trade in 2023 amounted to about US$31 trillion, contracting by close to three percent or $1 trillion, compared to the record high of $32 trillion in 2022. Trade in goods contracted by about $1.3 trillion in 2023, or five percent, while services trade showed resilience and gained about $500 billion, or eight percent, over the previous year.
For the first quarter of 2024, the update foresees a small but positive increase both in goods and services trade.
“Projections for 2024 are more optimistic. Overall, moderating global inflation and improving economic growth forecasts suggest a reversal of the downward trends. Additionally, rising demand for environmental goods should boost trade in 2024,” said the report released on March 21, 2024.
“However, it’s important to note that the global trade outlook for 2024 remains subject to significant uncertainties. Persistent geopolitical tensions, rising shipping costs, and high levels of debt weighing on economic activity in many countries may still exert negative influences on global trade,” it warned.
UNCTAD said the decline in the value of global trade throughout 2023 was driven by reduced demand in developed nations and trade weaknesses within East Asia and Latin American regions. Lower commodity prices further contributed to the lowering of the value of international trade in 2023.
In contrast, trade in services saw growth for most of 2023. Tourism and travel-related servi-ces rebounded strongly, increasing by almost 40 percent.
In terms of trade volume, growth stayed modestly positive throughout 2023.
A weak United States dollar also supported global trade volumes during 2023.
The report noted that the decline in global trade has been more pronounced for developing countries.
Trade for deve-loped countries dec-reased by about four percent for imports and three percent for exports.
Most regions have undergone negative trade growth in 2023.
For East Asia in particular, trade exhibited notable weakness throughout 2023 and logged a nine percent drop in intra-regional trade.
At the sectoral level, most industries experienced declines in trade value, with exceptions such as pharmaceuticals, transportation equipment (largely due to increased demand for wide-body aircraft) and motor vehicles, which grew by 14 percent, primarily fuelled by the demand for electric vehicles.
Sectors like apparel, chemicals, and textiles saw significant declines in 2023.
However, most sectors rebounded in the fourth quarter of 2023, except for apparel, where trade further contracted.
Among services, tourism and tra-vel-related services showed the strongest rebound.
In its outlook, UNCTAD identified some of the most relevant factors influencing global trade in 2024. These include global forecasts for GDP growth of around three percent for 2024, which falls below historical averages.
Others are strong demand for both container shipping and raw materials, commodity prices volatility due to ongoing geopolitical tensions and regional conflicts, lengthening of supply chains as they respond to shifts in trade policy and geopolitical tensions, increase in subsidies and trade restrictive measures as domestic concerns are prioritized, and shipping routes disruptions that are driving up shipping costs, extending voyage durations, and disrupting supply chains. – Press release
