Global goods trade on track for gradual recovery despite lingering downside risks

In the October 2024 update of “Global Trade Outlook and Statistics,” WTO economists note that global merchandise trade turned upwards in the first half of 2024 with a 2.3% year-on-year increase, which should be followed by further moderate expansion in the rest of the year and in 2025. The rebound comes on the heels of a -1.1% slump in 2023 driven by high inflation and rising interest rates. World real GDP growth at market exchange rates is expected to remain steady at 2.7% in 2024 and 2025. 

Inflation by the middle of 2024 had fallen sufficiently to allow central banks to cut interest rates.  Lower inflation should raise real household incomes and boost consumer spending, while lower interest rates should raise investment spending by firms.

Director-General Ngozi Okonjo-Iweala said: “We are expecting a gradual recovery in global trade for 2024, but we remain vigilant of potential setbacks, particularly the potential escalation of regional conflicts like those in the Middle East. The impact could be most severe for the countries directly involved, but they may also indirectly affect global energy costs and shipping routes. Beyond the economic implications, we are deeply concerned about the humanitarian consequences for those affected by these conflicts.”

“It is imperative that we continue to work collectively to ensure global economic stability and sustained growth, as these are fundamental to enhancing the welfare of people worldwide. In the past three decades since the WTO was established, per capita incomes in low- and middle-income economies have nearly tripled. We must continue our efforts to foster inclusive global trade,” DG Okonjo-Iweala said.

Diverging monetary policies among major economies could lead to financial volatility and shifts in capital flows as central banks bring down interest rates. This might make debt servicing more challenging, particularly for poorer economies. There is also some limited upside potential to the forecast if interest rate cuts in advanced economies stimulate stronger than expected growth without reigniting inflation.

Regional trade outlook

“The latest forecasts for world trade in 2024 and 2025 only show modest revisions since the last Global Trade Outlook and Statistics report in April, but these projections do not capture some important changes in the regional composition of trade. Historical trade volume data have been revised substantially, including downward revisions to European exports and imports back to 2020.  There have also been notable changes in GDP forecasts by region, including a 0.4 percentage point upgrade to North America's growth, which could influence trade flows in other regions as well,” WTO Chief Economist Ralph Ossa said.

Europe is now expected to post a decline of 1.4% in export volumes in 2024; imports will meanwhile decrease by 2.3%. Germany's economy contracted by 0.3% in the second quarter, with manufacturing indicators hitting 12-month lows in September. European exports have been dragged down by the region's automotive and chemicals sectors. A slump in EU exports of automotive products is worrying due to the potential impact on the sector's extensive supply chains. Meanwhile, organic chemical exports — some associated with medicines — are returning to normal trends following a surge during the COVID-19 pandemic. EU machinery imports also plummeted, particularly from China. This trend extends beyond geopolitical tensions, affecting imports from the United States, the Republic of Korea and Japan. Meanwhile, rising imports from India and Viet Nam suggest their growing roles in global supply chains.

Asia's export volumes will grow faster than those of any other region this year, rising by as much as 7.4% in 2024. The region saw a strong export rebound in the first half of the year driven by key manufacturing economies such as China, Singapore and the Republic of Korea. Asian imports show divergent trends: while China's growth remains modest, other economies such as Singapore, Malaysia, India and Viet Nam are surging. This shift suggests their emerging role as “connecting” economies, trading across geopolitical blocs, thereby potentially mitigating the risk of fragmentation.

South America ⁽¹⁾ is rebounding in 2024, recovering from weaknesses in both exports and imports experienced in 2023. North American trade is largely driven by the United States although Mexico stands out with stronger import growth compared to the region as a whole. Mexican imports are rebounding after a contraction in 2023, underscoring the country's growing role as a “connecting” economy in trade.

Africa's export growth is in line with the global trend. It has been revised downward from the April forecast, driven by an overall revision of Africa's trade statistics, and a greater-than-expected weakening in Europe's imports, Africa's main trade partner. In April, WTO economists forecasted a contraction in the CIS region's ⁽²⁾ imports for 2024, but now it is projected to post 1.1% growth, driven by stronger-than-expected GDP expansion. The Middle East had a major revision in its data, explaining the discrepancy between the April forecast and the current projections.

Merchandise exports of least-developed countries (LDCs) are projected to increase by 1.8% in 2024, marking a slowdown from the 4.6% growth recorded in 2023. Export growth is expected to pick up in 2025, reaching 3.7%. Meanwhile, LDC imports are forecast to grow 5.9% in 2024 and 5.6% in 2025, following a 4.8% decline in 2023. These projections are underpinned by GDP growth estimates for LDCs of 3.3% in 2023, 4.3% in 2024 and 4.7% in 2025.

Trade in services

The short-term outlook for services is more positive than for goods, with 8% year-on-year growth in the US dollar value of commercial services trade recorded in the first quarter of 2024. Comprehensive services statistics for the second quarter will be released later in October, but data for available reporters through June suggest that relatively strong growth is likely to be sustained in the second quarter as well. 

The services new export orders index rose to 51.7 in August, its highest level since July 2023. The services Purchasing Managers' Index remained firmly in expansion territory at 52.9 as of August, although it did turn down in September.

The full report is available here.

Detailed quarterly and annual trade statistics can be downloaded from the WTO Stats portal. In addition, the interactive tool WTO | World Trade Statistics 2023 presents key data and trends for international trade, allowing users to view the latest trends, in terms of both value and volume, using filters to display the data by economy, region, selected grouping, product group and services sector.

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