WTO economists say inflationary pressures should be eased this year and allow real incomes to rise again. However, with geopolitical tensions and uncertainty about economic policy, there is a great risk of having to revise those projections downwards.
Despite already seeing an increase in demand for commercial products this year, WTO Director-General Ngozi Okonjo-Iweala said mitigating geopolitical risks and tensions is imperative to avoid trade fragmentation and maintain economic growth and financial stability.
The volume of world merchandise trade is expected to increase by 2.6% in 2024 and 3.3% in 2025, following the 1.2% decline recorded in 2023. This decline was due to high energy prices having a significant impact on demand for manufactured goods.
Due to this decline, merchandise exports fell by 5% to US$24.01 trillion, while commercial services exports increased by 9% to US$7.54 trillion.
Large economies sustain their export volume
Despite the current geopolitical downturns and tensions, major economies have maintained their exports at favorable levels thanks to investment, as energy prices remained elevated compared to historical levels.
Global GDP is expected to remain stable over the next two years, with growth of 2.6% in 2024 and 2.7% in 2025. However, it warns that geopolitical tensions and political uncertainty could limit the recovery in trade. Food and energy prices could rise sharply again due to geopolitical developments, as some governments have become more skeptical about the benefits of trade and have taken steps to relocate production and redirect trade to allied countries.
The resilience of supply chains will be crucial to ensure a sustained recovery of global trade in the coming years.
Although economic projections show positive signs, with a rebound in the volume of goods and stability in GDP growth, geopolitical tensions and economic uncertainty represent latent threats.
Sources
World Trade Organization. (2024, April 10). Global trade outlook for 2024. WTO. https://www.wto.org/spanish/news_s/news24_s/tfore_10apr24_s.htm
