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UNCTAD Global Trade Update 2024

Context:

The United Nations Conference on Trade and Development (UNCTAD) has released its Global Trade Update for 2024, indicating a potential turnaround for international trade. After experiencing declines over multiple quarters, trade is expected to rebound in 2024, marking a significant shift in global economic dynamics.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. Key Highlights of the Global Trade
  2. Key Highlights of the Report Related to India

Key Highlights of the Global Trade

Global Trade Trends in 2023:

  • Global trade decreased by 3% to USD 31 trillion in 2023, following a peak in 2022.
  • The decline was primarily driven by reduced demand in developed economies and weaker trade in East Asia and Latin America.
  • Trade in goods fell by 5%, while trade in services grew by 8%, buoyed by a nearly 40% surge in tourism and travel-related services.

Impact on Developing Countries:

  • Developing nations experienced a sharper decline, with imports and exports falling by 5% and 7%, respectively, compared to a 4% drop in imports and 3% in exports for developed nations.
  • Most regions witnessed negative trade growth, except for a significant increase in intra-regional trade in Africa.

Specific Sectoral Changes:

  • Despite the overall decline, trade in environmental products increased by 2%, driven by a substantial surge in electric vehicle sales, which grew by 60%.
  • However, trade in apparel continued to contract, declining by 13%.

Outlook for 2024:

  • GDP growth is expected to continue at around 3% in 2024.
  • Challenges such as shipping disruptions and geopolitical tensions may raise costs and disrupt supply chains, casting shadows over the optimistic outlook.

Geopolitical and Trade Patterns:

  • Bilateral trade patterns have been favouring countries with similar geopolitical stances, indicating a rise in political proximity in trade.
  • There has been a concentration of global trade towards major trade relationships, although this trend has softened towards the end of 2023.

Key Highlights of the Report Related to India

India’s Efforts to Reduce Dependency:

  • Despite initiatives like the Production-Linked Incentive (PLI) scheme and Quality Control Orders (QCOs), imports from China increased.
  • UNCTAD’s estimates highlighted trade reorientation due to the Russia-Ukraine conflict.

Impact of Russia-Ukraine Conflict:

  • Russia’s trade dependency on China increased by 7.1% while decreasing by 5.3% with the EU.
  • This shift was primarily due to changes in Russian oil exports, with a redirection from the EU to China and India.

Positive Trade Dynamics for India:

  • The Ministry of Commerce and Industry emphasized favourable trade dynamics despite growing dependence.
  • India’s imports from the EU rose by 9.7% in 2023, with significant shares in capital goods and intermediate goods/raw materials.
  • India’s export of smartphones surged by 98.42% in 2023, reaching USD 14.27 billion.

Improved Trade Performance:

  • In 2023, India’s trade performance notably improved with both the EU and China.

-Source: The Hindu


June 2024
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