The Global Trade Research Initiative (GTRI), an economic think tank, predicted on Thursday that the continued geopolitical unpredictability would cause the growth in the global merchandise trade to drop by 1.2% in value terms.
According to the report, there was a notable surge in commercial services trade in 2023, rising 9% to USD 7.54 trillion, more than offsetting the 5% fall in the US dollar value of global product trade to USD 24.01 trillion.
Due to this, global exports of goods and commercial services were able to fall by 2% to USD 30.8 trillion in 2023 on a balance of payments basis.
The World Trade Organization (WTO) projects a 2.6% increase in trade volume in 2024, while the value of global goods trade is predicted to fall by 1.2% in 2024 compared to 2023, the think tank stated. This continues the pattern of trade values declining behind trade levels.
According to WTO projections, the amount of global goods trade is expected to increase by 2.6% in 2024 and 3.3% in 2025.
A frequently used metric to assess trade success, influence on trade values, is not included in the WTO prediction. Since the trade value is the total of all transaction values, calculating it is simple. But figuring the trade volume is more complicated than just adding up the amounts of various commodities, such diamonds and iron ore, as this might result in false results, according to GTRI founder Ajay Srivastava.
Furthermore, as per him, the WTO uses an intricate formula to determine changes in trade quantities.
The WTO "probably" did not want to be the bearer of bad news concerning a slowdown in merchandise trade, he continued.
Deflation is the process by which the World Trade Organization modifies the value of trade to reflect changes in prices. To make sure that the measured trade volume represents the actual amount of products and services traded rather than their price variations, this entails employing specialized price indices for various categories of commodities and services," he said.
According to Srivastava, the WTO also makes these modifications using information from global databases, such as pricing indices and trade statistics. The WTO's approach also takes seasonal fluctuations in trade into account.
"It periodically updates the base year for its calculations to ensure that the data remains relevant and reflects current market conditions," he stated.
In 2023, the value of merchandise exports was USD 23.8 trillion, whilst the value of imports was USD 24.2 trillion. This indicates a 4.5% drop in exports and a 5.4% drop in imports year over year.
In 2023, the value of commercial services exported reached USD 7.8 trillion, while USD 7.2 trillion was imported. In 2023, overall commerce (goods and services combined) declined somewhat from 2022 to 2023, with imports at USD 31.5 trillion (down 2.1%), and exports at USD 31.6 trillion (down 1.1%).
Geopolitical tensions, the escalating protectionist conflict in Ukraine, interruptions to shipping in the Red Sea, falling primary commodity prices, and currency rate volatility were the main causes of the reduction in global goods trade.
Additionally, according to GTRI, India's item export values fell by 5% in 2023 compared to 2022, in line with worldwide trends.
Nonetheless, the year-over-year rise in exports was favorable due to notable improvements in services exports of 9.9%, which were again consistent with worldwide trends.
India was placed 17th in the world in terms of exports, accounting for 1.8% of global commerce and USD 432 billion, a 5% decrease from 2022.
India moved up to 17 in 2023 from 18 in 2022. Furthermore, India was in eighth place for imports, with 2.8 percent of the total value of USD 673 billion - a 7 percent decrease from the year before.
India moved up to 8 in 2023 from 9 in 2022. "GTRI forecast a 1.2 percent drop in world merchandise trade values in 2024, over 2023," it stated.
