WTO Predicts Global Goods Trade To Leave Slowdown Behind, Grow 2.6% In Volume

The World Trade Organisation has forecast an upturn in merchandise trade for 2024, emerging from what has been a slow year of global trade and contraction. The international trade body has predicted that the volume of global merchandise trade will grow to 2.6% in 2024 and 3.3% in 2025, recovering back to 2022 levels, according to its latest report on Wednesday.

This is from 1.2% in 2023, which slipped from 3.0% recorded in 2022, owing to high energy prices and inflation concerns that put pressure on trade demand from major consumption centres. However, the curve is expected to move upward, going ahead.

The WTO noted that a recovery of demand for tradable goods in 2024 is already evident in the increase in household consumption, indicating improved income prospects.

In its April edition of the 'Global Trade Outlook and Statistics Report 2024', the trade body said that world real GDP growth at market exchange rates slowed from 3.1% in 2022 to 2.7% in 2023, but is expected to remain mostly stable over the next two years at 2.6% in 2024 and 2.7% in 2025.

"In 2024 and 2025, inflation is expected to gradually abate, allowing real incomes to grow again in advanced economies, boosting consumption of manufactured goods," it said.

The report also said that regional conflicts, geopolitical tensions and economic policy uncertainty pose downside risks to the forecast. These include the Red Sea crisis that has diverted and delayed shipments in the Middle East. The trade body has also cautioned that rising protectionism is another risk that could undermine the recovery of trade in 2024 and 2025.

WTO's Chief Economist Ralph Ossa noted that in the conditions of sustained disruptions, governments have become more sceptical about the benefits of trade and have taken steps aimed at reshoring 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," Ossa said.

WTO's forecast also expects that Asia will contribute more to merchandise trade growth, than it did over the last two years.

The Asian region as a whole is expected to add around 1.3 percentage points to the projected 2.9% growth in world exports this year, or around 45%. However, import contribution is expected to exceed that, adding 1.9 percentage points to the anticipated 2.3% growth in world imports or around 81%.

Meanwhile, world commercial services trade grew 9% in 2023 despite a decline in freight transport, due to recovering international travel and surging digitally delivered services.

In 2024, sporting events to be held in Europe in the summer as well as the easing of visa requirements by various countries are expected to boost tourism and passenger transport, according to the report.