The World Trade Organization (WTO) anticipates a 2.6 percent growth in global merchandise trade volume for 2024, followed by a 3.3 percent increase in 2025, rebounding from a more significant-than-expected decline of -1.2 percent in 2023.
Economic recovery and consumption
In a recent publication, the WTO indicated that inflation is projected to gradually ease, enabling real incomes to rise again in advanced economies and enhancing the consumption of manufactured goods. They noted that a recovery in demand for tradable goods in 2024 is already becoming apparent, driven by increased household consumption linked to better income outlooks.
Geopolitical risks and uncertainties
However, the organization cautioned that there are downside risks to this forecast due to current geopolitical tensions and uncertainties in policy. They pointed out that ongoing conflicts in the Middle East have disrupted sea shipments between Europe and Asia, while tensions in other regions could lead to trade fragmentation. Additionally, they highlighted rising protectionism as a threat that could hinder the recovery of trade in 2024 and 2025.
Regional import demand trends
The report noted that real import demand was weak in 2023 across most regions, particularly in Europe, North America, and Asia, with the notable exceptions being the Middle East and the Commonwealth of Independent States (CIS), where imports saw significant increases.
GDP growth vs. trade volume
The report explained that global real GDP growth at market exchange rates decreased from 3.1 percent in 2022 to 2.7 percent in 2023 but is expected to stabilize at 2.6 percent in 2024 and 2.7 percent in 2025. They attributed the disparity between steady GDP growth and the slowdown in merchandise trade volume to inflationary pressures, which have adversely impacted the consumption of trade-intensive goods, especially among major trading nations.
Merchandise vs. services trade
It further stated that the US dollar value of global merchandise trade fell by 5 percent in 2023, totaling US$ 24.01 trillion. This decline was largely counterbalanced by a robust 9 percent rise in commercial services trade, which reached US$ 7.54 trillion. The report noted that the drop in merchandise exports was partly due to declining commodity prices, including oil and gas, while commercial services trade benefited from a rebound in international travel and a surge in digitally delivered services.
Resilience in global trade
According to the report, world trade has shown remarkable resilience in recent years despite facing several significant economic shocks. By the end of 2023, merchandise trade volume had increased by 6.3 percent compared to 2019. Commercial services also experienced growth, with annual US dollar values rising by 21 percent from 2019 to 2023.
Future outlook for trade
In 2024 and 2025, inflation is expected to gradually decrease, facilitating a recovery in real incomes within advanced economies and enhancing the consumption of manufactured goods. The report indicated that the evident recovery in demand for tradable goods in 2024 is associated with an uptick in household consumption linked to improved income expectations.
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