World goods trade vol growth may dip 1.2% this year
The growth in the global merchandise trade is likely to decline by 1.2%, in value terms, due to the ongoing geopolitical uncertainties, economic think tank Global Trade Research Initiative (GTRI) said on Thursday.
The US dollar value of world merchandise trade fell 5% in 2023 to $24.01 trillion, but this decline was mostly offset by a strong increase in commercial services trade, which rose 9% to $7.54 trillion, it said.
This allowed world goods and commercial services exports on a balance of payments basis to slip 2% in 2023 to $30.8 trillion.
“Despite the World Trade Organization (WTO) expecting
a 2.6% rise in trade volume for 2024, the value of world merchandise trade is still seen to decline by 1.2% in 2024 from 2023, continuing the trend of trade values falling behind the trade volumes,” the think tank said.
The WTO has projected that the world merchandise trade volume will grow by 2.6% in
2024 and 3.3% in 2025.
“The WTO forecast does not include impact on trade values, which is a commonly used parameter to measure trade performance. Calculating the trade value is straightforward, as it involves adding up the values of all transactions. However, calculating trade volume is not as simple as just adding up quantities of different goods like iron ore and diamonds, which could lead to inaccurate conclusions,” GTRI founder Ajay Srivastava said.
He said the WTO employs a complex method to calculate changes in trade volumes.
He added that “probably” the WTO did not want to be the harbinger of bad news about slowing merchandise trade.
“The WTO adjusts the value of trade to account for changes in prices, a process known as deflation. This involves using specific price indices for different categories of goods and services to ensure that the measured trade volume reflects the actual quantity of goods and services traded rather than their price changes,” he noted.
The WTO also uses data from international databases, including trade statistics and price indices, to make these adjustments, Srivastava said, adding that the WTO’s methodology also includes adjustments for seasonal variations in trade.
“It periodically updates the base year for its calculations to ensure that the data remains relevant and reflects current market conditions,” he said.
In 2023, merchandise exports totalled $23.8 trillion, while imports stood at $24.2 trillion. This represents a year-on-year decline of 4.5% in exports and 5.4% in imports.
For commercial services, exports rose to $7.8 trillion and imports $7.2 trillion in 2023. Overall, the total trade (both merchandise and services) slightly decreased in 2023, with exports at $31.6 trillion (down by 1.1%) and imports at $31.5 trillion (down by 2.1%) compared to 2022.