Merchandise trade growth to remain subdued, trade in services to rise faster in 2024: UNCTAD

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The growth of merchandise trade is expected to remain subdued in 2024 though it should move back into positive territory, while trade in services on aggregate is seen to continue growing faster even if a slowdown in some of its components cannot be ruled out, according to the United Nations Conference on Trade and Development (UNCTAD).

In its report, the UN Trade and Development said the trade in services has shown more dynamism, with travel continuing to trend upwards while transport has also strengthened recently.

“Although comprehensive data is lagging, other components of trade in services appear to have been resilient in recent months. For its part, the robust performance of the telecommunications, computer, and information category seems to have continued,” it said.

However, the UN Trade and Development said a slowdown in some of the different components of trade in services, such as construction services, cannot be ruled out as the negative effect of higher global interest rates kicks in.

The report said the growth of merchandise trade overall, on the other hand, is expected to remain subdued this year with recent reports from some large exporting economies providing a rather mixed picture.

It said exports from China and Europe have shown some improvements in the first months of 2024.

By contrast, exports and imports of goods of the United States were 2 to 3 percent lower in January 2024 compared to the same period a year earlier, it said.

“In addition, in light of weak import demand from Europe and some advanced Asian economies – which have experienced a gradual decline in real terms over the course of 2023 – the dynamic of global merchandise trade in 2024 is expected to be moderate,” it added.

Further, UNCTAD said the trade outlook is still surrounded by significant risks and uncertainties, which are primarily tilted to the downside given the calls for protectionism, the continuing trade tensions and the rising political uncertainty.

It cited as an example of manifestation of such downside risks the announcement from the European Union to increase taxes on electric cars from China on the back of allegations of illegal export subsidies.

“Overall, such developments continue to weigh negatively on the trade outlook. They also hamper the emergence of concerted multilateral solutions at a time when international collaboration in the area of trade remains paramount to foster environmental protection and sustainable development around the world,” it added.

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