WTO forecasts global trade volume to increase by 2.6% in 2024

The World Trade Organisation (WTO) says the volume of trade globally should increase by 2.6 percent in 2024 and 3.3 percent in 2025.

The WTO disclosed this in its latest forecast report released on Wednesday.

“World merchandise trade volume is expected to grow 2.6% in 2024 and 3.3% in 2025 as demand for traded goods rebounds following a contraction in 2023,” WTO said.

“Trade volume was down 1.2% last year after recording 3.0% expansion in 2022 despite the outbreak of war in Ukraine.

“The lingering effects of high energy prices and inflation weighed especially heavily on demand for trade-intensive manufactured goods, but this should recover gradually over the next two years as inflationary pressures ease and as real household incomes improve.”

Also, WTO said high energy prices and inflation continued to weigh heavily on demand for manufactured goods, resulting in a 1.2 percent decline in world merchandise trade volume for 2023.

“The decline was larger in value terms, with merchandise exports down 5% to US$24.01 trillion,” WTO said.

“Trade developments on the services side were more upbeat, with commercial services exports up 9% to US$ 7.54 trillion, partly offsetting the decline in goods trade.

“Import volumes were down in most regions but especially in Europe, where they fell sharply. 

“The main exceptions were large fuel-exporting economies, whose imports were sustained by strong export revenues as energy prices remained high by historical standards.

“World trade remained well above its pre-pandemic level throughout 2023. By the fourth quarter it was nearly unchanged compared to the same period in 2022 (+0.1%) and had only risen slightly compared to the same period in 2021 (+0.5%).”

The report further estimates global gross domestic product (GDP) growth will remain mostly stable over the next two years at 2.6 percent in 2024 and 2.7 percent in 2025, after slowing to 2.7 percent in 2023 from 3.1 percent in 2022. 

According to WTO, the contrast between the steady growth of real GDP and the slowdown in real merchandise trade volume is linked to inflationary pressures, which had a downward effect on the consumption of trade-intensive goods, particularly in Europe and North America.

AFRICA’S EXPORTS TO RISE BY 5.3 PERCENT

On regional trade outlook, the report added that if current projections hold, Africa’s exports will grow faster than those of any other region in 2024, up 5.3 percent.

However, WTO said this is from a low base since the continent’s exports remained depressed after the COVID-19 pandemic.

Commenting on the outlook, Ngozi Okonjo-Iweala, WTO director-general, said it was important to address issues such as geopolitical crises to maintain trade and economic growth.

“We are making progress towards global trade recovery, thanks to resilient supply chains and a solid multilateral trading framework — which are vital for improving livelihoods and welfare,” Okonjo-Iweala said.

“It’s imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability.”

The report also warns that geopolitical tensions and policy uncertainty could limit the extent of the trade rebound adding that food and energy prices could again be subject to price spikes linked to such events.