Global trade turned positive in Q1 2024: UNCTAD

Global trade trends turned positive in the first quarter of 2024 (January-March) after contracting in 2023. According to the latest update from UN Trade and Development (UNCTAD) released on Tuesday, the value of trade in goods and services increased sequentially by about 1% and 1.5%, respectively.

"This surge, fuelled by positive trade dynamics for the US and developing countries, particularly large Asian developing economies, is expected to add approximately $250 billion to goods trade and $100 billion to services trade in the first half of 2024 compared to the second half of 2023," it said.

While global gross domestic product (GDP) growth forecasts remain around 3% for 2024, the short-term trade outlook is cautiously optimistic, UNCTAD said. If positive trends persist, international trade in 2024 could reach almost $32 trillion, though it is unlikely to surpass the record levels seen in 2022, it added.

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Geopolitical concerns

Global trade performance in 2024 was shaped by several geopolitical events. Houthi attacks on ships in the Red Sea led to higher freight costs and disrupted supply chains. The ongoing Russia-Ukraine war kept crude oil prices high. US-China trade tensions increased the cost of value chains, while the EU's proposed carbon tax and forest regulations added to the complexities.

Additionally, high interest rates, especially in developed economies, hampered trade. According to UNCTAD, global trade saw a 3% annual contraction, amounting to roughly $1 trillion, compared to the record high of $32 trillion in 2022. Despite this, the services sector showed resilience with a $500 billion, or 8%, increase over the previous year, while goods trade witnessed a 5% decline compared to 2022 to $1.3 trillion.

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Good and services

During the January-March period, trade growth varied across sectors, with green energy and AI-related products experiencing stronger growth, it said. “The outlook for 2024 remains positive, but geopolitical issues and industrial policies will continue reshaping global trade patterns.”

Although the steep decline in merchandise trade across major economies reversed in the first quarter of 2024, only a few countries, including Russia, the US, India and China, improved their exports. 

"Specifically, imports increased for Brazil, the Russian Federation, and the US. On the export side, China and India exhibited very strong quarter-over-quarter export performance. "Exports also grew for the Russian Federation and the US. In contrast, trade continued to decline for Japan and South Africa," it added.

Indian exports registered 7% quarterly growth, while imports fell by 1% during the period. In contrast, China's exports rose 9%, while imports remained flat. The US's exports and imports rose by 2% and 3%, respectively.

"In Q1 2024, developing countries experienced a positive trend in both imports and exports (about 2% increase). While developed countries saw positive exports (1% increase), their imports remained unchanged QoQ," it added.

"Geo-economic issues continue to play a significant role in shaping key bilateral trade trends. These factors not only impact trade between the major economies but can also influence their trade dynamics with other trading partners. Another significant factor impacting bilateral trade is the ongoing reshaping of value chains," it said.