The United Nations Conference on Trade and Development (UNCTAD) highlighted six trends in world trade.

Moving forward, according to Malaysia‘s Ministry of Finance’s Economy Outlook 2024, global trade is expected to increase in 2024, along with improved trade activity in advanced economies and emerging market and developing economies. 

According to UNCTAD’s outlook released on Tuesday, world trade will see a year-on-year decline of 4.5% in 2023.

World trade trends

Positive economic growth, but with significant disparities 

Global economic forecasts remain stable, but still fall below historical averages. 

In addition, substantial disparities persist between countries and regions in terms of projected economic outlook for 2024. 

These disparities will influence trade patterns. 

High interest rates and weakening industrial production and world trade

Economic activity is being hampered by persistently high interest rates in several economies. 

The latest Purchasing Managers’ Index (PMI) readings for China and the United States suggest a subdued outlook for industrial production in the coming months. 

Commodity price volatility 

Persistent regional conflicts and geopolitical tensions are likely to add further uncertainty to commodity markets.

In addition, the growing importance of securing critical minerals for the energy transition is expected to affect prices and further contribute to market volatility for these commodities.

Lengthening supply chains 

Global trade is being influenced by how supply chains respond to changes in trade policy and geopolitical tensions, with notable impacts seen in supply linkages between China and the United States. 

Companies in other regions, particularly in East Asian economies and Mexico, have had opportunities to become more integrated into supply chains affected by geopolitical concerns.

Increased subsidies and trade-restrictive measures

The resurgent use of industrial policy and the urgency of meeting climate commitments are driving changes in trade policies, both in the form of tariffs and non-tariff measures. 

The use of trade restrictive measures has increased in 2023. 

These inward-looking policies are expected to impede the growth of international trade. 

Low demand for container shipping and growing demand for raw materials

There is currently low demand for container shipping, as reflected by the lagging performance of the Shanghai Container Freight Rate Index. 

In contrast, the Baltic Dry Index has shown a positive trend in the second half of 2023, indicating an increase in global demand for commodities.