The World Trade Organisation has revised its growth projection for global trade in goods in 2024 marginally upwards to 2.7 per cent, from the previous estimate of 2.6 per cent, but warned that geopolitical tensions and policy uncertainty, largely due to the West Asia crisis, posed a downside risk to the forecast.
Economies, such as India and Vietnam, may be showing signs of emerging as “connecting” economies that are stepping in for the restructuring of global supply chains, per the latest global trade outlook update released by the WTO on Thursday.
The growth projection for 2025 is 3 per cent, which is lower than 3.3 per cent estimated earlier.
“We are expecting a gradual recovery in global trade for 2024, but we remain vigilant of potential setbacks, particularly the potential escalation of regional conflicts like those in the Middle East. The impact could be most severe for the countries directly involved, but they may also indirectly affect global energy costs and shipping routes,” WTO Director General Ngozi Okonjo-Iweala said commenting on the report.
The WTO report pointed out that the fastest growing region in 2024 was likely to be Asia, where output is expected to climb to 4 per cent, while the slowest growing region was likely to be Europe at 1.1 per cent. Germany has been particularly weak, with GDP growth turning slightly negative in Q2 the report stated. Global GDP growth at market exchange rates was expected to remain at 2.7 per cent in both years.
Connecting economies
India and Vietnam may be emerging as “connecting” economies, the report indicated pointing out that the fall in European imports was not simply the result of fragmentation as it was not only from China, but also from geopolitically aligned economies such as the US, Korea and Japan.
“Conversely, imports from India and Vietnam are rising, hinting at their emerging role as `connecting’ economies,” it said.
The revised trade forecast is consistent with the WTO’s Global Trade Outlook and Statistics report issued in April, which predicted 2.6 per cent growth in both merchandise trade and GDP in 2024, followed by trade growth of 3.3 per cent and GDP growth of 2.7 per cent in 2025..
The US dollar value of world merchandise trade was nearly unchanged in the first half of 2024 compared to a year earlier while services trade was up 8 per cent in the first quarter. “Rising trade volume and flat trade values imply a decline in export and import prices of around 2.6 per cent,” the report calculated.