Context:
The World Trade Organisation has published the latest edition of the Global Trade Outlook & Statistics Report.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Global Trade Outlook & Statistics Report
- About the World Trade Organisation (WTO)
Global Trade Outlook & Statistics Report
Overview
- The WTO’s “Global Trade Outlook and Statistics” reviews recent global trade trends up to Q4 2023 and provides forecasts for 2024 and 2025.
- Detailed breakdowns of merchandise and commercial services trade by sector and region are included, along with information on top traders.
Key Forecasts
- World merchandise trade volume is forecasted to increase by 2.6% in 2024 and 3.3% in 2025, rebounding from a 1.2% decline in 2023.
Import Trends
- Weak import demand was observed in 2023 across most regions, notably in Europe, North America, and Asia.
- Exceptions include the Middle East and the Commonwealth of Independent States (CIS) where imports saw a significant rise.
Global GDP Growth
- Global real GDP growth decelerated from 3.1% in 2022 to 2.7% in 2023.
- The growth is expected to stabilize at 2.6% in 2024 and 2.7% in 2025.
- The disparity between GDP growth and merchandise trade volume slowdown is attributed to inflationary pressures reducing consumption of trade-intensive goods.
Trade Value
- The US dollar value of world merchandise trade dropped by 5% in 2023, reaching US$ 24.01 trillion.
- This decline was counterbalanced by a 9% increase in commercial services trade, reaching US$ 7.54 trillion.
- The decrease in merchandise exports was influenced by declining commodity prices like oil and gas.
- The rise in commercial services trade was driven by the recovery of international travel and a surge in digitally delivered services.
Resilience of Global Trade
- Despite major economic shocks, global trade has shown resilience in recent years.
- Merchandise trade volume increased by 6.3% by the end of 2023 compared to 2019.
- Commercial services trade also grew, with the annual US$ value rising by 21% between 2019 and 2023.
Inflation and Income Growth
- Inflation is projected to gradually decrease in 2024 and 2025.
- This will enable real incomes to rise in advanced economies, boosting the consumption of manufactured goods.
- An increase in demand for tradable goods in 2024 is evident due to improved income prospects and increased household consumption.
Risks and Uncertainties
- Downside risks to the forecast exist due to geopolitical tensions and policy uncertainty.
- Conflict in the Middle East has disrupted sea shipments between Europe and Asia, while tensions in other regions could result in trade fragmentation.
About the World Trade Organisation (WTO)
Overview
- The WTO is an intergovernmental organization that oversees and facilitates international trade among nations.
- Established in 1995 under the 1994 Marrakesh Agreement, it succeeded the General Agreement on Tariffs and Trade (GATT) which was founded in 1948.
Functions
- The WTO fosters trade in goods, services, and intellectual property among its member countries.
- It provides a platform for negotiating trade agreements, typically aimed at reducing or eliminating tariffs, quotas, and other trade barriers.
- These agreements are endorsed by representatives of member governments and subsequently ratified by their respective legislatures.
Membership
- The WTO comprises 164 member states, accounting for over 96% of global trade and global GDP.
Headquarters
- Located in Geneva, Switzerland.
Decision-making Process
- Decisions within the WTO are made through consensus among all 164 member states.
- As a result, all members possess veto powers, ensuring that no decision can be made without the agreement of every member.
-Source: The Hindu
