WTO Predicts Trade Growth Amid Global Challenges
The World Trade Organisation (WTO) has forecasted a growth in world merchandise trade volume by 2.6% in 2024 and 3.3% in 2025, following a decline of 1.2% in 2023. The WTO report highlights that inflation is expected to decrease, leading to increased real incomes and consumption of manufactured goods in advanced economies. However, geopolitical tensions and rising protectionism pose risks to this forecast.
In 2023, import demand was weak in most regions, except for the Middle East and the Commonwealth of Independent States, where imports surged. World real GDP growth slowed from 3.1% in 2022 to 2.7% in 2023, with expectations to remain stable at 2.6% in 2024 and 2.7% in 2025. The decline in merchandise trade volume is attributed to inflationary pressures affecting consumption of trade-intensive goods.
The US dollar value of world merchandise trade fell by 5% in 2023 to USD 24.01 trillion, but this was offset by a 9% rise in commercial services trade, reaching USD 7.54 trillion. The decline in merchandise exports was due to falling commodity prices, while commercial services trade benefited from recovering international travel and digital services.
Despite economic shocks, world trade has shown resilience, with merchandise trade volume up 6.3% compared to 2019 and commercial services increasing by 21% from 2019 to 2023. The report anticipates a recovery in demand for tradable goods in 2024, linked to improved income prospects.
Doubts Revealed
WTO -: WTO stands for the World Trade Organisation. It is an international organization that helps countries trade goods and services with each other smoothly and fairly.
Trade Growth -: Trade growth means an increase in the buying and selling of goods and services between countries. It is a sign that economies are doing well and people are buying more things.
Inflation -: Inflation is when the prices of goods and services go up over time. It means you need more money to buy the same things you used to buy for less.
Geopolitical tensions -: Geopolitical tensions refer to conflicts or disagreements between countries. These can affect trade because countries might not want to trade with each other if they are not getting along.
Protectionism -: Protectionism is when a country tries to protect its own businesses by making it harder for foreign goods to enter the market. This can include adding taxes on imports or setting strict rules.
CIS -: CIS stands for the Commonwealth of Independent States. It is a group of countries that were once part of the Soviet Union, like Russia and Ukraine, that work together on trade and other issues.
Merchandise trade -: Merchandise trade is the buying and selling of physical goods, like toys, clothes, and electronics, between countries.
Commercial services -: Commercial services are services that are traded between countries, like banking, insurance, and tourism, instead of physical goods.