Global trade to hit record $33tn in 2024, but uncertainty looms for 2025

Outlook remains uncertain due to risks of expanded trade wars, US policy shifts and geopolitical challenges

Global automotive trade decreased 3 per cent in the third quarter but is expected to end the year with a 4 per cent growth, Unctad said. AFP

Global trade is expected to reach a high of about $33 trillion this year, showcasing resilience despite continuing economic uncertainties challenging global supply chains and market dynamics.

The trade value will increase by about $1 trillion this year, reflecting 3.3 per cent annual growth, the UN Trade and Development (Unctad) said in its new Global Trade Update report on Thursday.

However, the outlook for next year remains uncertain due to risks of expanded trade wars and geopolitical challenges, prompting calls for strategic action from developing economies. It is clouded by potential US policy shifts, including broader tariffs that could disrupt global value chains and affect trading partners, the report said.

This year’s growth is largely driven by a 7 per cent surge in services trade, which accounted for half of the overall expansion or almost $500 billion. In contrast, goods trade increased by 2 per cent but remained below its 2022 peak. Momentum in both sectors is expected to continue into the year’s final quarter, the report said.

Looming threats

Potential US policy measures risk triggering retaliation and ripple effects, disrupting industries and economies along entire supply chains. Even the threat of tariffs introduces unpredictability, weakening trade, investment, and economic growth, the UN body warned.

Countries most exposed to changes in the US trade policy include those with large trade surpluses with the US and higher tariff barriers, it said. Based on 2023 figures for trade in goods, these nations include China ($280 billion trade surplus), India ($45 billion), EU ($205 billion) and Vietnam ($105 billion).

Developing economies need coordinated support to navigate uncertainty, reduce dependencies, and strengthen their links to global markets

Unctad's secretary general Rebeca Grynspan

Other countries such as Canada ($70 billion), Japan ($70 billion), Mexico ($150 billion), and South Korea ($50 billion) could also face risks despite having relatively lower tariffs on US imports or established trade agreements, Unctad said.

The uncertain trajectory of the US dollar and changes in the world’s biggest economy’s macroeconomic policy further add to global trade concerns.

Unctad's secretary general Rebeca Grynspan emphasised the need for co-ordinated policies to mitigate these risks.

“Trade remains a cornerstone of sustainable development. To seize the opportunities in 2025, developing economies need co-ordinated support to navigate uncertainty, reduce dependencies, and strengthen their links to global markets,” she said.

Developed economies driving growth

Developed economies led growth during the third quarter, with stable demand driving a 3 per cent rise in imports and a 2 per cent increase in exports. Japan recorded the strongest quarterly growth in goods exports at 5 per cent, alongside a highest 13 per cent annual rise in services exports.

The US saw merchandise imports climb 4 per cent both quarterly and annually, while exports grew 2 per cent year-on-year and 1 per cent for the quarter. Meanwhile, the EU maintained robust growth in services trade, with both imports and exports projected to remain positive for the year.

Global apparel trade grew 14 per cent in the last quarter. Reuters

On the other hand, developing economies, traditionally the engines of global trade, experienced a slowdown this year. Imports fell by 1 per cent, and South-South trade (trade between developing countries,) declined by the same margin in the last quarter.

In China, goods imports decreased by 1 per cent in the third quarter, while goods exports fell 2 per cent. While in India, goods imports dropped 1 per cent, and their exports declined 3 per cent in the quarter.

In East Asia, trade stalled, with imports showing no growth and exports rising only 1 per cent for the quarter.

High-growth sectors offer hope

Amid these challenges, high-growth sectors such as information and communication technology and apparel offered some optimism. Both sectors posted significant gains in the third quarter, growing 13 per cent and 14 per cent.

These opportunities, along with stable global growth and easing inflation, provide a chance for developing economies to diversify and strengthen their trade position, the report said.

“This growth underscores the potential for diversification and entry into value-added industries. Stable global growth forecasts and easing inflation also present a chance to build resilience in 2025,” it added.

However, traditional sectors critical to developing economies, such as energy and metals, faced declines. Energy trade fell 2 per cent in the third quarter and 7 per cent over the year, while metals trade contracted 3 per cent quarterly and annually.

Automotive trade decreased 3 per cent in the July-September period but is expected to end the year with a modest 4 per cent growth, Unctad said.