United Nations Conference on Trade and Development (UNCTAD) has said that global trade will rebound in 2024 after several quarters of decline.
According to the latest Global Trade Update, global trade saw a 3 per cent contraction, equaling roughly $1 trillion, compared to the record high of $32 trillion in 2022.
The UN body noted that despite the decline, the services sector showed resilience with a $500 billion, or 8%, increase from the previous year, while trade in goods experienced a $1.3 trillion, or 5%, decline compared to 2022.
The report said, “The fourth quarter of 2023 marked a departure from previous quarters, with both merchandise and services trade stabilizing quarter-over-quarter. Developing countries, especially those in the African, East Asian and South Asian regions, experienced growth in trade during this period.”
UNCTAD further stated that “During 2023, trade performance diverged between developing and developed countries, with the former experiencing a decline of approximately 4 per cent and the latter around 6 per cent. South-South trade, or trade between developing economies, saw a steeper decline of about 7 per cent.
“However, these trends reversed in the last quarter of 2023, with developing countries and South-South trade resuming growth while trade in developed countries remained stable.
“Geopolitical tensions continued to impact bilateral trade flows, as shown by the Russian Federation reducing its trade dependence on the European Union while increasing its reliance on China. Additionally, trade interdependence between China and the United States decreased further in 2023.
“Regionally, trade between African economies bucked the global trend by increasing 6 per cent in 2023, whereas intra-regional trade in East Asia (-9%) and Latin America (-5%) lagged behind the global average.”
The report forecast that the outlook for 2024 suggests a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts.
“Additionally, rising demand for environmental goods, particularly electric vehicles, is expected to bolster trade this year.
“However, geopolitical tensions and supply chain disruptions persist as pivotal factors influencing bilateral trade trends and require ongoing scrutiny. Disruptions in shipping routes, particularly those related to security issues in the Red Sea and the Suez Canal, as well as adverse climate effects on water levels in the Panama Canal carries the potential to escalate shipping costs, prolong voyage times and disrupt supply chains,” it said.
