On April 4, 2024, container ships from Europe, Africa, India, Pakistan, Southeast Asia and other international trunk lines loaded and unloaded containers at the container terminal in Qianwan Port Area of Qingdao Port, China.
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Global trade is expected to gradually rebound this year before growing further in 2025 as the impact of rising inflation fades into the past, the World Trade Organization said on Wednesday.
In its latest “Global Trade Outlook and Statistics” report, the WTO predicts that global trade volume will grow by 2.6% in 2024 and by a further 3.3% in 2025. Previously, global trade volume fell by 1.2% in 2023, exceeding expectations, as inflationary pressures and rising interest rates put pressure on international trade.
“The reason for this pickup is basically normalization of inflation and normalization of monetary policy,” WTO chief economist Ralph Ossa told CNBC’s Silvia Amaro. ation, which is a drag on trade in 2023.”
The trade rebound is expected to be “broad-based” and include across Europe. Last year, the European region saw the worst declines in trade volumes due to geopolitical tensions and an energy crisis triggered by Russia’s full-scale invasion of Ukraine.
“Europe does put pressure on international trade in 2023, but we don’t think that will happen again,” Osa said.
Geopolitical risks remain
Overall, world trade has been “very resilient” in recent years, exceeding its pre-Covid-19 pandemic peak in late 2023, the WTO report concluded. However, the group warned that geopolitical tensions could still pose risks to its outlook.
In particular, Osa said, the ongoing war between Israel and the Palestinian militant group Hamas could cause major trade disruptions if it spilled over into energy markets.
The economist also pointed to signs of “fragmentation” in global trade along geopolitical lines.
The WTO report divided the global economy into two “hypothetical geopolitical blocks” based on U.N. voting patterns and found that trade between the blocks grew more slowly than within them. For example, the United States and the United Kingdom have generally taken similar positions on recent United Nations votes on the Russia-Ukraine conflict, while China and South Africa have taken opposite views.
This schism is particularly stark between the United States and China, the world’s two largest economies.
“We’ve seen trade between the United States and China grow 30% slower than trade between these countries and other countries,” Osa said, referring to the period since trade tensions first emerged in 2018.
“That doesn’t mean they’re no longer doing a lot of deals, but their share of deals is increasingly moving away from those relationships.”
Trade tensions between the United States and China resurfaced this week, with U.S. Treasury Secretary Janet Yellen saying she would not rule out the possibility If Beijing is found to have engaged in unfair trade practices, tariffs will be imposed. European Commission President Ursula von der Leyen echoed calls for a tougher stance on China on Tuesday.
At the heart of the dispute are claims that China is “dumping” subsidized green technology products onto international markets, effectively undercutting domestic producers. Beijing denies these claims.
The WTO report did not detail trade forecasts for China, but total Asian exports are expected to increase by 3.4% in 2024 and 2025.
“That doesn’t mean that we don’t see or don’t expect any surges in specific industries,” Osa said.
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