WTO forecasts rebound in global trade in 2024

New Delhi: Global goods trade is expected to pick up gradually this year following a contraction in 2023 that was driven by high energy prices and related inflation, World Trade Organisation (WTO) economists said in a new forecast.

The volume of world merchandise trade is expected to increase by 2.6 per cent in 2024 and 3.3 per cent in 2025 after falling 1.2 per cent in 2023.

However, regional conflicts, geopolitical tensions, and economic policy uncertainty pose substantial downside risks to the forecast, they asserted.

In the latest "Global Trade Outlook and Statistics" report, WTO economists noted that inflationary pressures are expected to abate this year, allowing real incomes to grow again -- particularly in advanced economies.

In the process, it would provide a boost to the consumption of manufactured goods.
A recovery of demand for tradable goods in 2024 is already evident, with indices of new export orders pointing to improving conditions for trade at the start of the year.

WTO Director-General Ngozi Okonjo-Iweala said, "We are making progress towards global trade recovery, thanks to resilient supply chains and a solid multilateral trading framework -- which are vital for improving livelihoods and welfare."

"It's imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability," the Director-General said.

High energy prices and inflation continued to weigh heavily on demand for manufactured goods, resulting in a 1.2 per cent decline in world merchandise trade volume for 2023.

The decline was larger in value terms, with merchandise exports down 5 per cent to USD 24.01 trillion. Services trade were more upbeat, with commercial services exports up 9 per cent to USD 7.54 trillion, partly making up for the decline in goods trade.

Import volumes were down in most regions but especially in Europe, where they fell sharply.
World trade remained well above its pre-pandemic level throughout 2023. By the fourth quarter, it was nearly unchanged compared to the same period in the 2022 (+0.1 per cent) and had only risen slightly compared to the same period in 2021 (+0.5 per cent).

The report further estimated global GDP growth will remain mostly stable over the next two years at 2.6 per cent in 2024 and 2.7 per cent in 2025, after slowing to 2.7 per cent in 2023 from 3.1 per cent in 2022.

Further, merchandise exports of least-developed countries (LDCs) are forecasted to grow 2.7 per cent in 2024, down from 4.1 per cent in 2023, before growth accelerates to 4.2 per cent in 2025.

Meanwhile, imports by LDCs should grow 6.0 per cent this year and 6.8 per cent next year following a 3.5 per cent contraction in 2023.