- Global trade seen to rebound this year after several quarters of decline
- Initial figures point to $1 trillion decline in global trade in 2023 due to subdued demand and weaker trade
- Trade in services was a bright spot last year showing resilience despite challenging conditions
International trade is expected to rebound this year after several quarters of decline experienced in the immediate past.
So says the newest Global Trade Update from the United Nations Conference on Trade and Development (UNCTAD).
After a record high in global trade in 2022 totaling $32 trillion, there was a 3% contraction in 2023 of about $1 trillion.
Despite the decline, the services sector proved to be a bright spot at %500 billion, or an 8% hike from the previous year. Trade in goods, meanwhile, saw a $1.3 trillion declines, or 5%, compared to the previous year.
The last quarter of 2023 was a turning point, with merchandise and services trade stabilizing quarter-over-quarter, according to the UNCTAD report.
Developing nations from South Asia, East Asia, and Africa experienced growth in trade for the period.
Of the major economies, the Russian Federation showed notable volatility in trade last year, while China and India both experienced growth of 5% in imports for the former and exports for the latter.
Geopolitical tensions were a factor in global trade with the Russian Federation cutting its dependence on the European Union, while increasing its dependence on China. Trade between the US and China also continued to drop last year.
UNCTAD said that at the sectoral level, “most industries experienced declines in trade value, with exceptions such as pharmaceuticals, transportation equipment, and motor vehicles.”
On the opposite end, sectors like apparel, chemicals and textiles experienced notable declines last year.
“However,” said the Global Trade Update, “most sectors rebounded in the fourth quarter of 2023, except for apparel, where trade further contracted.”
In the services sector, tourism and travel-related services had the strongest rebound, rising by close to 40% in 2023.
Initial data for the first quarter of this year points to a continued recovery in global trade.
On the other hand, geopolitical tensions and supply chain disruptions remain as pivotal factor “influencing bilateral trade trends and require ongoing scrutiny.”
Disruptions in shipping routes caused by security issues in the Red Sea and Suez Canal, coupled with adverse climate effects on the Panama Canal’s water levels could conceivably escalate shipping costs, extend voyage times, and drastically alter supply chains.
READ: Disruptions in global shipping signal unprecedented challenges to world trade-UNCTAD
