Chennai: After declining over several quarters, international trade is poised for a rebound in calendar year 2024, according to UN’s trade body.
As per the available data for the first quarter of 2024, there is a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts. Additionally, rising demand for environmental goods, particularly electric vehicles, is expected to bolster trade this year, said UNCTAD.
However, geopolitical tensions and supply chain disruptions persist as pivotal factors influencing bilateral trade trends. Disruptions in the shipping routes, particularly in the Red Sea and the Suez Canal, as well as adverse climate effects on water levels in the Panama Canal, carry the potential to escalate shipping costs, prolong voyage times and disrupt supply chains.
In 2023, global trade saw a 3 per cent contraction, equalling roughly $1 trillion, compared to the record high of $32 trillion in 2022. Despite this decline, the services sector showed resilience with a $500 billion, or 8 per cent increase from the previous year, while trade in goods experienced a $1.3 trillion, or 5 per cent decline.
The fourth quarter of 2023 marked a departure from previous quarters, with both merchandise and services trade stabilizing quarter-over-quarter. Developing countries, especially those in the African, East Asian and South Asian regions, experienced growth in trade during this period.
While major economies generally saw a decline in merchandise trade throughout 2023, towards the end of 2023, trade in goods saw growth in several major economies, including China with 5 per cent increase in imports and India with a 5 per cent rise in exports.
During 2023, trade performance diverged between developing and developed countries, with the former experiencing a decline of approximately 4 per cent and the latter around 6 per cent. South-South trade, or trade between developing economies, saw a steeper decline of about 7 per cent. However, these trends reversed in the last quarter of 2023, with developing countries and South-South trade resuming growth while trade in developed countries remained stable.
Sectors like apparel, chemicals and textiles saw significant declines in 2023. However, most sectors rebounded in the fourth quarter of 2023, except apparel. Among services, tourism and travel-related services showed the strongest rebound, increasing by almost 40 per cent.
