UNCTAD Expects Total Global Trade To Shrink By 5% This Year

the United Nations trade agency stated on the 11th that total global trade will shrink by 5% this year compared with last year, and the overall forecast for next year is also relatively pessimistic.
The United Nations Conference on Trade and Development (UNCTAD) released the "Latest Global Trade Update" stating that total global trade is expected to reach approximately US$30.7 trillion this year. Among them, trade in goods is expected to decrease by nearly US$2 trillion, or 8%, but trade in services is expected to increase by approximately US$500 billion, or 7%.
The United Nations Conference on Trade and Development believes that one of the reasons for the shrinkage of global trade is the poor export performance of developing countries.
The report reads: "Throughout 2023, global trade has been shrinking. The main influencing factors include reduced demand in developed countries, poor performance of East Asian economies and falling commodity prices. Together, these factors have led to a significant contraction in trade in goods."
The United Nations Conference on Trade and Development believes that the forecast for global trade in 2024 is still "highly uncertain and generally relatively pessimistic."
"Although some economic indicators suggest improvements are expected, ongoing geopolitical tensions, elevated debt levels and generally fragile economic conditions are expected to have a negative impact on global trade patterns," the report reads.
According to a report on the website of France's "Echo" on December 11, global geopolitical fragmentation has been reflected in trade. Since the outbreak of the Russia-Ukraine conflict, trade between so-called "friendly" countries has continued to grow, while trade between geopolitically estranged countries has suffered. This is reflected in a research report released by the United Nations Conference on Trade and Development on Monday.
Since the beginning of 2022, trade between "friendly" countries has increased by more than 6%, while global trade has shrunk by 4% to 6%. For example, from the fourth quarter of 2022 to the fourth quarter of 2023, the US trade volume with China decreased by approximately 2%, but the US trade volume with the EU increased by 1.3%. During the same period, Russia's trade volume with China increased by 8%, while its trade volume with the EU shrank by 6%.
Overall, supply chains have begun to reorganize due to the new geopolitical reality. This restructuring has various conflicting factors, but it is also related to the industrial policies adopted by various countries to deal with climate change or protect local enterprises. The UNCTAD report explained that whether it is tariff measures (increasing tariffs) or non-tariff measures (introducing regulations on the origin of products), "there will be more restrictive measures on trade in 2023."
This trend of returning to the local area has restricted international trade, which is not active. An increase in trade between friendly countries has not helped, and global trade has even shrunk due to weak global economic growth, declining demand in developed countries and poor economic performance in Southeast Asian countries.
In October this year, the World Trade Organization already cut the growth rate of international trade in 2023 by half, and is expected to grow by only 0.8%. The United Nations Conference on Trade and Development is even more pessimistic, predicting that international trade volume this year will only be 30.7 trillion U.S. dollars, which will shrink by about 5% from the record-breaking 2022