Global trade in goods is expected to grow by 2.6% this year after it shrank by 1.2% in 2023, the World Trade Organization (WTO) said in its latest forecast published on Wednesday.
In the report, the Geneva-based organization painted a more pessimistic picture than it had in October, when it forecast growth of 0.8% for 2023 and 3.3% for 2024.
WTO chief economist Ralph Ossa said the decline in trade volume was largely due to Europe, which is lagging behind most other regions. Last year, European exports shrank by 2.6%, while imports fell by 4.7%. This year, the WTO expects exports to grow by 1.7% and imports to remain almost unchanged.
"The resilience of trade is also being tested by disruptions on two of the world's main shipping routes: the Panama Canal, which is affected by freshwater shortages, and the diversion of traffic away from the Red Sea [due to attacks by Yemen's Houthi rebels]," Ossa said.
"Under these conditions of sustained disruptions, geopolitical tensions, and policy uncertainty, risks to the trade outlook are tilted to the downside."
High energy prices and inflation dampened global demand for industrial goods in 2023. WTO experts expect inflationary pressure to decrease this year. This could cause real wages to rise and demand to pick up again, particularly in richer countries, they said.
In contrast to trade in goods, exports of digital services grew by 9% in 2023 and reached a value of $4.25 trillion dollars. These include streaming services, digital education and online services for companies. Digital services accounted for 13.8% of total global exports of goods and services last year.