WTO Forecasts Modest Global Trade Growth for 2024-2025

The World Trade Organization (WTO) has released its latest forecast for global trade growth. Economists predict a steady increase in the volume of world merchandise trade.

The forecast shows growth of 2.7% in 2024 and 3% in 2025. This growth comes alongside expectations for global GDP growth.

World GDP, measured at market exchange rates, is expected to maintain a 2.7% growth rate in both 2024 and 2025. The first half of 2024 saw a rebound in world merchandise trade.

It increased by 2.3% compared to the previous year. This upward trend is expected to continue moderately for the rest of 2024 and into 2025.

The recent upturn follows a decline in 2023. High inflation and rising interest rates were the main factors behind this downturn. Now, inflationary pressures have eased in advanced economies.

This has allowed central banks to start cutting interest rates. Lower interest rates should stimulate consumption and boost investment.

Global Trade Outlook

These factors are expected to support a gradual recovery in global trade. However, the WTO cautions that significant downside risks remain.

Regional conflicts, geopolitical tensions, and political uncertainty could impact trade growth. The revised trade forecast aligns with the WTO‘s World Trade Outlook and Statistics report from April.

Asia is projected to be the fastest-growing region in 2024. The WTO expects output in Asia to rise by 4.0%. In contrast, Europe is likely to be the slowest-growing region, with growth of just 1.1%.

Germany, in particular, has shown weakness. Its GDP growth was slightly negative in the second quarter. The value of world merchandise trade in US dollars remained largely unchanged in the first half of 2024.

However, trade in services increased by 8% in the first quarter. The rise in trade volume coupled with stable trade values suggests a decrease in export and import prices.

Among commercial services, travel saw the most significant growth. It increased by 19% in the first quarter. The WTO notes that inflation had fallen enough by mid-2024 to allow central banks to cut interest rates.

Lower inflation should increase real household incomes and boost consumer spending. Lower interest rates are also expected to increase business investment spending.

These factors combined to paint a cautiously optimistic picture for global trade growth in the coming years. However, the WTO’s forecast underscores the need for continued vigilance in the face of ongoing economic challenges.