As experts in the economy, we at Extreme Investor Network are always keeping a close eye on global trade trends and forecasting future outcomes. Recently, the World Trade Organization released its “Global Trade Outlook and Statistics” report, projecting a gradual rebound in global trade for the remainder of 2024 and into 2025. This positive outlook comes after a 1.2% decline in 2023, largely due to inflationary pressures and higher interest rates impacting international trade.
According to the report, the normalization of inflation and monetary policy will drive the expected increase in total global trade volumes by 2.6% in 2024 and a further 3.3% in 2025. This rebound is projected to be broad-based, with Europe predicted to see a significant improvement in trade volumes after facing challenges in 2023 due to geopolitical tensions and energy crises.
While the outlook appears promising, the WTO report also highlights potential risks, particularly in terms of geopolitical tensions. The ongoing conflict between Israel and Palestinian militant group Hamas, for example, could result in major trade disruptions if it escalates and impacts energy markets. Additionally, signs of global trade fragmentation along geopolitical lines are a cause for concern, with trade growth between certain countries slowing compared to trade growth within those countries.
The report points out the trade tensions between the United States and China specifically, noting that trade growth between the two nations has been slower compared to their trade relationships with other countries. Recent statements from U.S. Treasury Secretary Janet Yellen and European Commission chief Ursula von der Leyen suggest a potential escalation in trade disputes with China, particularly regarding allegations of unfair trade practices.
Despite these challenges, the WTO report remains optimistic about overall trade growth in Asia, forecasting a 3.4% aggregate increase in exports for the region in both 2024 and 2025. While specific forecasts for China are not detailed in the report, it is worth noting that certain sectors may see surges in trade activity.
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