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After falling by 1.20 per cent in the last year, the volume of global merchandise trade may jump by 2.60 per cent in the current year and 3.30 per cent in the next year.
The latest ‘Global Trade Outlook and Statistics’ report of the World Trade Organization (WTO), released today (Wednesday) in Geneva, made these forecasts.
“However, regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the forecast,” said the report prepared by the WTO economists.
“Global goods trade is expected to pick up gradually this year following a contraction in 2023 that was driven by the lingering effects of high energy prices and inflation” the report mentioned.
The decline in last year was larger in value terms, with merchandise exports dropped by 5 per cent to US$ 24.01 trillion. Trade in services, however, increased significantly as the global exports of commercial services jumped by 9 per cent to US$ 7.54 trillion, according to the report.
Earlier in the last month, two of the United Nations Conference on Trade and Development (UNCTAD) reports on international trade showed that the value of the global merchandise trade declined by 5 per cent in 2023 while the trade in services increased by 8 per cent.
WTO economists also noted that inflationary pressures are expected to abate this year, allowing real incomes to grow again - particularly in advanced economies - thus providing 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,” the forecast report mentioned.
WTO Director-General Ngozi Okonjo-Iweala, in a statement in regards to the latest trade outlook report, 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 report also estimated that the global GDP growth at market exchange rates would 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.
“The contrast between the steady growth of real GDP and the slowdown in real merchandise trade volume is linked to inflationary pressures, which had a downward effect on consumption of trade-intensive goods, particularly in Europe and North America,” it added.
The report was launched at a press conference in Geneva, where the organisation’s headquarters is situated, WTO Chief Economist Ralph Ossa said: "Some governments have become more sceptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations.”
Ossa added that the resilience of trade is also being tested by disruptions on two of the world's main shipping routes: the Panama Canal, which is affected by freshwater shortages, and the diversion of traffic away from the Red Sea.
“Under these conditions of sustained disruptions, geopolitical tensions, and policy uncertainty, risks to the trade outlook are tilted to the downside," he continued.
The report also warned that geopolitical tensions and policy uncertainty could limit the extent of the trade rebound. “Food and energy prices could again be subject to price spikes linked to geopolitical events,” it added.
The report's special analytical section on the Red Sea crisis noted that while the economic impact of the Suez Canal disruptions stemming from the Middle East conflict has so far been relatively limited, some sectors, such as automotive products, fertilisers and retail, have already been affected by delays and freight costs hikes.
The report furthermore presented new data indicating that geopolitical tensions have affected trade patterns marginally but have not triggered a sustained trend toward de-globalization.
According to the report, merchandise exports of least-developed countries (LDCs) including Bangladesh may grow by 2.7 per cent in 2024 which was from 4.1 per cent in 2023. It may, however, rebound by 4.2 per cent in the next year.
Meanwhile, imports by LDCs should grow 6.0 per cent in the current year and 6.8 per cent in the next year following a 3.5 per cent contraction in 2023
In regards to services trade, the report mentioned that global exports of digitally delivered services soared to US$ 4.25 trillion in 2023, up 9.0 per cent year-on-year, and accounted for 13.8 per cent of world exports of goods and services.
In 2023, the value of these services--traded over borders through computer networks and encompassing everything from professional and management services to streaming of music and videos, online gaming, and remote education--surpassed pre-pandemic levels by over 50 per cent, the report added.