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Today's Insights: Global Trade Outlook and Statistics Report 2024
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Global Trade Growth in 2024
The World Trade Organization (WTO), in its latest Global Trade Outlook and Statistics Report (the "Report"), predicts that global merchandise trade will grow by 2.7% in 2024, slightly higher than the previous estimate of 2.6%. The report further projects that global merchandise trade volume could increase by 3.0% in 2025. However, geopolitical tensions and increased uncertainty in economic policies continue to pose significant downside risks to these forecasts. According to the WTO’s leading indicators, the outlook for services trade is more favorable compared to goods trade.
Asia is expected to lead the growth in merchandise exports, with a projected increase of 7.4% in 2024, outpacing all other regions. WTO Director-General Ngozi Okonjo-Iweala stated, “We expect global trade to gradually recover in 2024, but we remain cautious of potential setbacks, particularly with potential conflicts in regions like the Middle East. While the direct impact may be most severe for the countries involved, it could also indirectly affect global energy costs and shipping routes.”
“We must continue working together to ensure global economic stability and sustained growth, as this is essential to improving the well-being of people around the world. Over the past three decades since the WTO was established, per capita income in low- and middle-income economies has nearly tripled. We must keep pushing for more inclusive global trade,” she added.
Moderate Global Expansion
The report shows that global merchandise trade turned upward in the first half of 2024, growing by 2.3% year-on-year, and is expected to expand moderately for the rest of 2024 and into 2025. In 2023, global merchandise trade contracted by 1.1% due to high inflation and rising interest rates, but this recent rebound reflects a positive shift. For 2024 and 2025, world real gross domestic product (GDP), measured at market exchange rates, is expected to stabilize at a growth rate of 2.7%.
The WTO also believes that by mid-2024, inflation will have decreased to a level that allows central banks to reduce interest rates. Lower inflation should boost real household income and stimulate consumer spending, while lower interest rates are expected to encourage business investment.
However, as central banks lower interest rates, the divergence in monetary policies between major economies could lead to financial market turbulence and changes in capital flows. This could make debt servicing more challenging, particularly for poorer economies. There is limited upside potential in the forecast unless developed economies’ rate cuts stimulate growth more than expected without reigniting inflation.
Regional Trade Outlook
According to the report, historical trade volume data have been significantly revised, including downward adjustments to Europe’s import and export figures for 2020 compared to the previous report in April.
WTO Chief Economist Ralph Ossa noted, “There have also been notable changes in GDP forecasts across regions, including a 0.4 percentage point increase in North America’s growth rate, which could influence trade flows in other regions.”
Specifically, Europe’s exports are now expected to decline by 1.4% in 2024, with imports projected to decrease by 2.3%. In the second quarter, Germany’s economy contracted by 0.3%, and its manufacturing indicators for September hit a 12-month low. The European automotive and chemical industries have been a drag on exports.
The report highlights concerns over the decline in EU automotive exports, which could have potential ripple effects across the broader supply chain. Meanwhile, exports of organic chemicals, some of which are related to pharmaceuticals, surged during the pandemic but are now returning to normal trends. EU machinery imports, especially from China, have also significantly declined, a trend that extends beyond geopolitical tensions and affects imports from the United States, South Korea, and Japan. At the same time, imports from India and Vietnam continue to rise, highlighting their growing role in global supply chains.
Asia’s exports are forecasted to grow faster than any other region, with a 7.4% increase expected in 2024. The report attributes this strong rebound to major manufacturing economies like China, Singapore, and South Korea. While China's import growth remains moderate, other economies such as Singapore, Malaysia, India, and Vietnam are seeing a surge in imports. This shift indicates that these countries are increasingly playing the role of "connector" economies, facilitating trade across geopolitical groups and potentially reducing the risks of fragmentation.
South America’s trade is also expected to rebound in 2024, recovering from sluggish exports and imports in 2023. In North America, trade is largely driven by the U.S., but Mexico’s import growth is stronger compared to the rest of the region. After a contraction in 2023, Mexico’s imports have rebounded, underscoring its growing role as a "connector" economy in trade.
Africa’s export growth is aligned with global trends. However, compared to the April forecast, Africa’s export growth has been revised downward due to comprehensive revisions in African trade statistics and larger-than-expected reductions in European imports, one of Africa’s key trade partners.
In contrast to goods trade, the short-term outlook for services trade is more optimistic. Commercial services trade in U.S. dollar terms grew by 8% year-on-year in the first quarter of 2024. While comprehensive second-quarter services data will be available in late October, preliminary data up to June suggest that the second quarter may have also seen relatively strong growth.
The WTO reports that in August, the new export orders index for services rose to 51.7, the highest level since July 2023. The services Purchasing Managers’ Index (PMI) stood at 52.9 in August, remaining in expansion territory, although it slightly declined in September.
