Trade in goods around the world is forecast to pick up over the course of this year, the World Trade Organization has predicted.
Volumes should increase by 2.6% in 2024 and 3.3% in 2025 after falling 1.2% in 2023. The fall last year was driven by the effect of high energy prices and inflation, the WTO said.
Last year there was a 1.2% decline in merchandise trade volumes and a 5% fall in value terms down to US$24.01 trillion.
Inflationary pressures are expected to abate this year, allowing real incomes to grow “thus providing a boost to the consumption of manufactured goods,” the WTO said, adding that a recovery of demand for tradable goods is already evident. It pointed to indices of new export orders as evidence of improving trade conditions. The WTO reckons that global GDP growth will remain mostly stable over the next two years at 2.6% and 2.7%.
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.”
Downside risk: geopolitics and policy uncertainty
However, the WTO warns that geopolitics and policy uncertainty could limit the trade rebound and that both food and energy could be subject to price spikes. Although noting that the Red Sea crisis and the economic impact of disruptions has been “relatively limited,” the body noted that some products such as automotive, fertilisers, and retail, have already been affected by delays and freight cost hikes.
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. 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.”
Region by region
Africa’s exports are likely to grow faster than those from any other region, the WTO forecast, but pointed out that Africa is growing from a lower base. CIS states (i.e. the former countries and regions of the Soviet Union) is also expected to grow quickly – but, again, also from a reduced base. North America, the Middle East, and Asia are all forecast to have moderate growth of about 3.4% to 3.6%. South America is forecast to grow more slowly at 2.6%, with Europe being the laggard at 1.7%.
On the import side, the WTO is forecasting strong import growth of 5.6% for Asia and 4.4% for Africa but other regions are expected to have low import growth with Europe only likely to reach o.1% while the CIS region states will likely be deep into negative territory at -3.8%.
