New UN data suggests global trade will rebound this year, after a period of decline in 2023.
Preliminary figures from the UN Conference on Trade and Development (UNCTAD) indicate that global trade contracted by 3% in 2023 (US$1trn), with four successive quarters of decreasing trade in goods between Q3 2022 and Q2 2023.
However, trade began to stabilise at the end of 2023, with data for Q1 now suggesting an upward trend, with goods trade up by 3% and services up by 2.9% in Q1.
“Available data for the first quarter of 2024 suggests a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts,” the agency said in a press release accompanying the new data.
Key data
Other key findings from UNCTAD for 2023 include:
- Trade in goods dropped by 5% ($1.3trn)
- Services trade proved to be more resilient, with an 8% year-on-year increase in 2023
- Trade performance declined in developing countries by 4% in 2023 and in developed countries by 6%
- GDP growth for 2024 is forecast to be 3%
Rebound predicted
UNCTAD’s findings tally with a forecast from the Economist Intelligence Unit (EIU) earlier this year which predicted global trade to rebound this year.
“Goods trade performance will be supported by ongoing inventory destocking, while services trade will benefit from sustained strength in tourism and the nearshoring of investment related to the financial and telecommunications sectors,” the EIU said in its ‘Global Trade Outlook 2024’ report.
Challenges remain
However, UNCTAD also said that trade will continue to be affected by “geopolitical tensions and supply chain disruptions”, including ongoing crises in the Red Sea and Suez Canal.
Indeed, the IMF recently reported that the volume of trade passing through the Suez Canal declined 50% year-on-year in the first two months of the year. As a result of the Red Sea crisis, trade around the Cape of Good Hope surged by around 74% compared to last year.