International trade in goods has maintained strong resilience

The World Trade Organization report predicts that global trade in goods will rebound in 2024. However, due to geopolitical tensions and economic policy instability, optimistic forecasts for international trade face downside risks.

On April 10, the World Trade Organization released the Global Trade Overview and Data. The report predicts that global trade in goods will rebound in 2024, ending a contraction in 2023. Regional conflicts, geopolitical tensions and economic policy uncertainties also pose huge downside risks to international trade, the report said.

In 2023, most parts of the world, including Europe, North America and Asia, were weak, with only the Middle East achieving high growth, the report said. In this context, international trade fell 1.2% in 2023, more than expected. However, in 2024, the international commodity trade will see a 2.6% growth rate, and this growth rate will further increase to 3.3% in 2025.

The report estimates that global real GDP growth was 2.7% in 2023, down from 3.1% in the previous year. This figure will stabilize at 2.6% and 2.7% in 2024 and 2025. The combination of economic growth and trade contraction is because inflationary pressures curb the consumption of trade-intensive commodities, especially in major trading countries.

According to the report, world trade in commodities in 2023 was $24.01 trillion, down 5% year on year; but in the same period, service trade reached $7.54 trillion, up 9% year on year. The decline in commodity trade was mainly due to the decline in the prices of commodities such as oil and gas, while the increase in service trade (in dollars) was mainly benefited from the recovery of international travel and the rapid growth of digital platform services.

The report points out that in the past few years, despite many major economic shocks, international trade has maintained strong resilience. By the end of 2023, global trade in goods has increased by 6.3% compared with 2019, and trade in services has maintained a high annual growth rate of 21% during the same period.

The report predicts that inflation is expected to gradually ease between 2024 and 2025 and advanced economies reinvigorate real incomes, thus stimulating consumption of manufactured goods. The recovery in trade commodity demand in 2024 is already evident, which is closely related to the increase in income expectations and increased household consumption.

The report also noted that optimistic forecasts for a rebound in international trade also face downside risks due to current geopolitical tensions and policy instability. Conflict in the Middle East has disrupted shipping routes between Europe and Asia, and tensions elsewhere have fragmented trade. In addition, the rise of trade protectionism will also affect the trade recovery in 2024 and 2025.