22 March 2024 (Lloyd's List) - AFTER declining throughout 2023, trade in goods is expected to resume its upward trend in 2024 as the global economy recovers, according to the UN Committee on Trade and Development.

“The decline in the value of global trade throughout 2023 was primarily driven by reduced demand in developed nations and trade weaknesses within East Asia and Latin American regions,” Unctad said.

Lower commodity prices further contributed, reducing the value of international trade in 2023. But this was countered by an increase in services spending.

By the fourth quarter of the year, however, there were signs of an emerging recovery.

“Both merchandise and services trade stabilised quarter over quarter, signalling the end to the decline in global trade of goods, and the end of the strong upward trend in trade in services,” Unctad said.

The outlook for 2024 is more optimistic. Lower inflation and improving economic growth forecasts suggest a reversal of the downward trends.

“Rising demand for environmental goods should boost trade in 2024,” Unctad said.

“However, it’s important to note that the global trade outlook for 2024 remains subject to significant uncertainties.”

Persistent geopolitical tensions, rising shipping costs, and high levels of debt weighing on economic activity in many countries could still exert negative influences on global trade, it said.

In 2023, global trade saw a 3% contraction, amounting to roughly $1trn, compared with the record high of $32trn in 2022. For physical goods, this fall was sharper, down 5%.

Global forecasts for GDP growth remain at around 3% for 2024, below historical averages.

Furthermore, substantial disparities persist among countries and regions in terms of their anticipated economic outlook for the upcoming year.

Unctad warned that the “prioritisation of domestic concerns” and the urgency of meeting climate commitments were driving changes in both industrial and trade policies.

“The utilisation of trade restrictive measures and inward-looking industrial policies are anticipated to negatively impact on the growth of international trade,” it said.

Unctad said increased demand had been behind higher shipping costs for both containerised and dry bulk commodities, but added that ongoing geopolitical tensions and regional conflicts could renew volatility in energy and agricultural markets.

“Global trade is being influenced by the response of supply chains to shifts in trade policy and geopolitical tensions,” it said.