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Growth is driven by positive trade dynamics between the US and developing countries, mostly in sectors related to green energy and artificial intelligence.
Global trade trends turned positive in the first quarter of 2024, with the value of trade in goods increasing by around 1 percent quarter-on-quarter and the value of trade in services by around 1.5 percent.
According to the latest Global Trade Update released by the United Nations Trade and Development Agency (UNCTAD) on July 2, exports from China (9 percent), India (7 percent), and the United States (3 percent), the main drivers of growth, increased. On the other hand, exports from Europe showed no growth, while exports from Africa declined by 5 percent.
According to the report, trade in goods in the first half of 2024 is expected to add around $250 billion compared to the second half of 2023, while trade in services is expected to add around $100 billion. However, the short-term trade outlook remains cautiously optimistic, while global GDP growth forecasts remain around 3 percent for 2024. The report notes that if positive trends continue, international trade could approach $32 trillion in 2024 but is unlikely to exceed the record high seen in 2022.
South-South Trade Sets the Pace
Trade with developing countries and South-South trade both experienced a 2 percent increase in both imports and exports in the first quarter of 2024. This growth, which is significantly higher than the stability of imports in developed countries and the modest 1 percent increase in exports, suggests a potential for further expansion. However, it's important to note that South-South trade's value is still notably below 2022 levels, with its four-quarter moving average remaining negative at 5 percent.
Green Energy and Artificial Intelligence Sectors See Strong Growth
The report underscores that the significant trade growth across sectors, particularly in products related to green energy and artificial intelligence, is bolstering the economy and instilling confidence.
The trade value of high-performance servers increased by 25 percent compared to the first quarter of 2023, while the value of other computer and storage units increased by 8 percent. The trade value of electric vehicles increased by around 25 percent between 2022 and 2023.
Positive Outlook Softened by Geopolitical and Political Challenges
Despite these positive trends, the outlook for 2024 is tempered by potential geopolitical issues and industrial policy impacts.
While the report also highlights that geopolitical tensions, rising transport costs, and evolving industrial policies could reshape global trade patterns, since late 2022, there has been an increase in the political proximity of trade, favoring countries with similar geopolitical stances, such as the so-called "peer-to-peer" relationship.
Although this trend has begun to soften, the report warns that an increasing focus on domestic industries and trade restrictions could hinder the growth of international trade.
