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WTO Forecasts Global Trade Rebound Amidst Challenges and Uncertainties

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WTO Forecasts Global Trade Rebound Amidst Challenges and Uncertainties

The World Trade Organization (WTO) anticipates a resurgence in global merchandise trade after a sluggish performance in 2023. Projections suggest a 2.6% growth in trade volume for the current year, followed by a further increase of 3.3% in 2025, driven by declining inflation and improved economic conditions.

While last year’s 1.2% decline in trade was larger than anticipated, particularly in Europe, it remains relatively modest overall. However, the region’s subdued trade growth was attributed to factors like high commodity prices, notably natural gas, which impacted both exports and imports.

Looking ahead, Asia is poised to play a significant role in driving global trade, accounting for a substantial portion of both exports and imports. Africa’s exports are also expected to surpass pre-pandemic levels by the end of the year, showcasing resilience and potential growth in the region.

Despite the positive outlook, geopolitical tensions, supply chain disruptions, and climate change effects pose risks to the trade landscape. Recent attacks on commercial ships and disruptions in key maritime routes highlight ongoing challenges faced by the global trading community.

Services trade, on the other hand, remained robust, with notable growth observed in financial and insurance services. However, geopolitical tensions have contributed to a riskier environment, impacting trade patterns and flows.

The WTO underscores concerns regarding rising protectionism and potential fragmentation in trade flows, emphasizing the need for collaborative efforts to sustain the recovery and promote inclusive trade practices.

While uncertainties persist, the WTO remains cautiously optimistic about the resilience of global trade. However, continued vigilance and concerted action are essential to navigate the evolving trade landscape and mitigate potential risks to the recovery.

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UNCTAD: Global Trade Expected to Rebound in 2024 Amid Geopolitical Uncertainties

The United Nations Conference on Trade and Development (UNCTAD) forecasts a rebound in global trade, expecting it to hover around 3% this year after experiencing a 3% contraction in the previous year. Despite persistent geopolitical uncertainties, this optimistic outlook is attributed to rising demand for container shipping in recent months.

While logistical challenges such as disruptions in key shipping routes like the Red Sea, Black Sea, and Panama Canal remain a concern, the increasing demand for container shipping offers a glimmer of hope. Some East Asian and Latin American economies stand to benefit by integrating into supply chains affected by geopolitical tensions.

The report highlights the shifting landscape of trade policies, driven by domestic priorities and climate commitments. The adoption of trade restrictive measures and inward-looking industrial policies may impact international trade growth.

Looking ahead to 2024, projections are more positive, with moderating global inflation and improving economic growth forecasts indicating a reversal of downward trends. Additionally, the growing demand for environmental goods is expected to stimulate trade. However, uncertainties persist, underscoring the need for caution.

In 2023, most major economies, except Russia, experienced a decline in merchandise trade. Goods trade saw a 5% dip compared to 2022, with Russia particularly affected by a sharp decline in export levels tied to energy markets. However, there are signs of recovery, with China and India witnessing quarter-on-quarter growth in merchandise trade.

India, for instance, saw a 5% year-on-year growth in merchandise exports in the last quarter of 2023. However, on an annual basis, the country experienced a 6% contraction in export growth. These dynamics underscore the complex interplay of factors influencing global trade in the face of evolving geopolitical and economic landscapes.