Global trade forecasts a rebound in 2024

GLOBAL trade is poised for a 2024 rebound following a 3 percent contraction totaling approximately $1 trillion in 2023, according to the latest United Nations Conference on Trade and Development Global Trade Update.

For the first quarter of 2024, preliminary data suggests a continued improvement in global trade, driven by factors like moderating global inflation and rising demand for environmental goods, notably electric vehicles. However, ongoing geopolitical tensions and supply chain disruptions remain critical factors affecting trade dynamics.

In 2023, global trade saw a 3 percent contraction, equaling roughly $1 trillion, compared to the record high of $32 trillion in 2022. While the services sector demonstrated resilience with an 8 percent increase of $500 billion, trade in goods experienced a 5 percent decline of $1.3 trillion compared to 2022.

The fourth quarter of 2023 showed stability in both merchandise and services trade, particularly in developing countries, notably in Africa, East Asia and South Asia. While major economies generally saw a decline in merchandise trade throughout 2023, it noted that certain exceptions emerged, like the Russian Federation, which exhibited volatility in trade statistics.

Toward the end of 2023, trade in goods saw growth in several major economies, including China (+5 percent imports) and India (+5 percent exports), although it declined for the Russian Federation and the European Union.

Developing countries experienced a 4 percent decline in trade, while developed countries saw a 6 percent decrease. However, these trends reversed in the last quarter of 2023, with developing countries resuming growth.

Geopolitical tensions continued to impact bilateral trade flows, evident in shifts like the Russian Federation’s reduced dependence on the European Union and increased reliance on China.

Sectorwise, while industries like pharmaceuticals and transportation equipment saw growth, sectors such as apparel and chemicals experienced declines.

The services sector, especially tourism and travelrelated services, exhibited a significant rebound, increasing by almost 40 percent in 2023.