News Excerpt:

The World Trade Organization (WTO) recently revised downwards its projection for merchandise trade volume growth to 2.6 percent for 2024 from 3.3 percent estimated in October.

More detail about news:

• However, the multilateral trade body, in its latest bi-annual ‘Global Trade Outlook and Statistics’, said after a contraction of 1.2 percent in 2023, demand for traded goods will rebound in 2024 as inflationary pressures ease and real household incomes improve.
• In October last year, it had projected merchandise trade volume to grow 0.8 percent in 2023.
• India’s merchandise exports in value terms are expected to contract by 1-1.5 percent in 2023-24 after two consecutive years of growth, according to initial trade data estimates.

Key highlights of the report:

• According to the WTO, there is a high degree of uncertainty associated with the current forecast due to the large number of risk factors present in the global economy. These include regional conflicts, geopolitical tensions and rising protectionism.
• Trade volume growth in 2024 could be as high as 5.8 percent or as low as -1.6 percent.
• Conflict in the Middle East has diverted sea shipments between Europe and Asia while tensions elsewhere could lead to trade fragmentation. 
• Rising protectionism is another risk that could undermine the recovery of trade in 2024 and 2025.
• According to the report, India’s rank among leading merchandise exporters (excluding intra-EU trade) improved by a notch to 13 in 2023 from the preceding year, though its share remained unchanged at 2.2 percent. 
• Similarly, its rank among major merchandise importers (excluding intra-EU trade) rose a notch to 6, while its share remained the same at 3.4 percent.

• India’s rank among leading exporters of commercial services (excluding intra-EU trade) remained unchanged at 5 in 2023 from the preceding year, with its share remaining the same at 5.4 percent.
• However, India’s rank dropped a notch to 6 among major importers of commercial services (excluding intra-EU trade). Its share declined to 4.2 percent from 4.8 percent in the preceding year.
• The dollar value of world merchandise trade fell 5 percent in 2023 to $24.01 trillion but this decline was mostly offset by a strong increase in commercial services trade, which rose 9 percent to $7.54 trillion.

The decline in merchandise exports:

• The decline in merchandise exports was partly due to falling prices for commodities, such as oil and gas. Meanwhile, commercial services trade was lifted by recovering international travel and surging digitally-delivered services.
• Decline on the export side in 2023 was led by the Russian Federation, whose exports plunged 28 percent, as well as by manufacturing-oriented Asian economies, including China (-5 percent), Japan (-4 percent) and the Republic of Korea (-8 percent).
• Other major economies saw smaller declines or even modest increases, including the United States (-2 percent), Germany (+1 percent), and Mexico (+3 percent).
• Taken as a whole, the European Union’s exports to the rest of the world were up 2 percent while intra-EU trade was down 1 percent, leaving total exports flat in dollar terms.
• Meanwhile merchandise imports were down in most economies, partly due to falling prices of commodities such as natural gas, the price of which fell 63 percent on an average in 2023.
• All major economies saw a decline except a few large-energy exporters, including the United Arab Emirates (+7 percent), the Russian Federation (+10 percent) and Saudi Arabia (+11 percent).