Container ships from international mainlines, including those from Europe, Africa, India, Pakistan and Southeast Asia, load and unload containers at the Qianwan Port Area Container Terminal of Qingdao Port in Qingdao, China, on April 4, 2024. A
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The World Trade Organization said on Wednesday it expects global trade to gradually rebound this year, before rising further in 2025, with the effects of higher inflation in the rearview mirror.
In its latest World Trade Prospects and Statistics report, the World Trade Organization forecasts that total global trade volume will rise by 2.6% in 2024, and by a further 3.3% in 2025. This comes after a larger-than-expected decline of 1.2% in 2023. .., as inflationary pressures and high interest rates affected international trade.
“The reason for this rise is basically the normalization of inflation and also the normalization of monetary policy, which has been a pressure on trade in 2023,” WTO chief economist Ralph Osa told CNBC's Silvia Amaro.
The trade recovery is expected to be “broad-based”, including across Europe, which saw some of the deepest declines in trade volumes last year as a result of geopolitical tensions and the energy crisis caused by Russia's all-out invasion of Ukraine.
“Europe was already influencing international trade in 2023, and we don’t see that being the case anymore,” Osa said.
Geopolitical risks remain
The WTO report concluded that global trade has been “remarkably resilient” overall in recent years, rising above its pre-Covid-19 pandemic peak in late 2023. However, the organization warned that geopolitical tensions still pose a risk to its prospects. .
In particular, the ongoing war between Israel and the Palestinian Hamas movement could cause major trade disruptions if it spills over into energy markets, Osa said.
The economist also pointed to signs of “fragmentation” of global trade along geopolitical lines.
The WTO report divided the global economy into “two hypothetical geopolitical blocs” based on voting patterns at the United Nations, and found that trade growth between the two blocs was slower than within them. For example, the United States and the United Kingdom took similar positions in recent votes at the United Nations on the Russian-Ukrainian conflict, while China and South Africa, on the other hand, took opposite views.
This fragmentation was particularly noticeable between the world's two largest economies, the United States and China.
“We have seen that the growth of trade between the United States and China has been 30% slower than the growth of trade between these countries and other countries,” Osa said, referring to the period since 2018, when trade tensions initially arose.
“That doesn't mean they don't still trade a lot, but their trading stocks are increasingly moving away from these relationships.”
Trade tensions between the United States and China resurfaced this week, when US Treasury Secretary Janet Yellen said she would not rule out potential tariffs on Beijing if it was found to be engaging in unfair trade practices. European Commission President Ursula von der Leyen on Tuesday echoed calls for a tougher stance on China.
The dispute centers on allegations that China is “pumping” subsidized green technology goods onto international markets, effectively undermining domestic producers. Beijing denies these allegations.
The WTO report does not provide details on China's trade outlook, but it expects an overall increase of 3.4% in Asian exports in 2024 and 2025.
“This does not mean that, in certain sectors, we could not see or do not expect to see any increases,” Osa said.
