UNCTAD projects $1trn boost to global economy in 2024 as trade grows 2% worldwide

Onome Amuge

The United Nations Trade & Development (UNCTAD) has predicted a two percent growth in trade for the first half of 2024, noting that If sustained, this increase would add around $250 billion to the value of global goods trade for the first half of the year, and $1 trillion across the whole of 2024,indicating a positive trajectory for global trade despite its fragility in the current geopolitical landscape.

The UNCTAD, in a recent research paper, indicated that despite ongoing geopolitical tensions, costly shipping rates, and differing industrial policies, global trade trends have rebounded from the challenges of 2023, with a one percent increase in goods trade from the fourth quarter  of 2023 to the first quarter of 2024.

The positive trade trends indicated by UNCTAD, despite being relatively modest, represent a turning point after the difficult economic climate of 2023.

UNCTAD’s findings indicated that as inflationary pressures ease and global growth forecasts improve, the negative macroeconomic trends that characterized the majority of 2023 are reversing, leading to an uptick in trade activity.

The latest UNCTAD report revealed further that the trade recovery is largely fueled by developing countries in East Asia, where imports and exports have both increased by two percent quarter-on-quarter. Moreover, robust trade performance in the Americas, coupled with a notable two percent increase in south-south trade, is seen contributing to the positive trend in global trade.

However, while the world economy shows signs of trade recovery, not all regions have experienced the same level of growth. This is as exports from Africa, the Pacific, and southwest Asia declined in the first quarter of the year, and intra-regional trade in these areas experienced a contraction.

UNCTAD’s research paper highlighted a broad-based recovery across various industries, with particular growth recorded in the chemicals, pharmaceuticals, textiles, and metals and minerals sectors during Q1 of this year.

The report also projected strong demand for green energy-related technologies, such as electric vehicles, solar panels, batteries, and high-end semiconductors, which are anticipated to grow at a much faster rate than the average for other sectors. AI-related exports are also expected to experience rapid expansion, reflecting the growing importance of artificial intelligence and related technologies in the global economy.

While the future outlook for global trade appears promising, UNCTAD’s research paper also underscored a number of potential risks that could hamper this positive trend, including geopolitical tensions, uncertainties related to the transition to clean energy, and concerns over the impact of AI on various industries may prompt governments to adopt trade-restrictive policies. 

The research warned that these policies, designed to shield domestic producers from competition, may result in a decrease in global trade, posing a significant threat to the continued growth of international commerce.

The UNCTAD report also observed a trend toward friendshoring, where countries are increasingly choosing to trade with other nations that share similar political ideologies. This development, it stated, has led to a concentration of trade flows among countries with close political ties, resulting in trade relationships becoming more tightly aligned with geopolitical dynamics. 

While this trend was observed to intensify throughout much of 2023, the report suggested that the phenomenon may have begun to stabilise in the latter half of last year and may even be easing, indicating that the world economy could be moving towards a more balanced and inclusive approach to global trade.