Context

The United Nations Conference on Trade and Development (UNCTAD) predicts that global trade will improve in 2024. 

• The forecast for international trade is optimistic and World GDP is expected to continue at around 3%. 

Reasons for Anticipation of Rise In Global Trade 2024

• Moderating Global Inflation: 

  • As inflation rates stabilize, it encourages trade by reducing uncertainty and cost fluctuations.
    • Stable prices make it easier for businesses and people to analyze the market trend due to which they’re more likely to trade with other countries.

• Improved Economic Growth Forecasts: 

• • A favorable economic forecast worldwide encourages greater trade among nations by making people feel more confident about buying and selling things across borders.

• Growing Demand for Environmental Goods: 

• • The focus on sustainability and eco-friendly products is causing higher trade in environmental goods, especially in electric cars, leading to higher growth in trade. 

Challenges in Global Trade 2024

• Shipping Route Disruption: Recent disruptions in key shipping routes, such as the Red Sea, Black Sea, and Panama Canal, could increase transportation costs and disrupt supply chains, affecting international trade negatively.
• Political Conflicts Worldwide: Ongoing political conflicts worldwide may lead to instability in crucial markets like energy and agriculture, discouraging international trade.
• • Example: Russia-Ukrain Conflict, Israel-Hamas War, etc.
• Strained supply of essential minerals: The rising demand for minerals essential for clean energy technologies may strain their supply and cause price fluctuations, posing additional risks to international trade.

Global Trade Trends in 2023

• Overall decrease in global trade: Global trade decreased by 3%, amounting to approximately $1 trillion, compared to the previous record high of $32 trillion in the preceding year.
  • The downturn was primarily driven by reduced demand in developed economies and weaker trade in East Asia and Latin America.
• Sector Performance: While the services sector grew by 8% year-on-year, trade in goods declined by 5% compared to 2022.
• Quarterly Growth: Quarter-over-quarter figures showed signs of improvement, particularly in major economies like China and India.

Indian Trade Performance in 2023

• Merchandise Exports: India experienced a 5% growth in merchandise exports in the last quarter of 2023 compared to the same period the previous year. 
  • However, there was a 6% decrease in annual export growth.
• Services Exports: Services exports remained unchanged in the last quarter of 2023 compared to the previous year. 
  • However, there was a 14% annual growth in services exports.
• Changes in India’s Trade Dependence in 2023: India’s reliance on China and the European Union increased by 1.2%.
  • Conversely, dependence on Saudi Arabia decreased by 0.6% during the same period.

Impact of Positive Outlook of Global Trade 2024  on Indian Trade or Economy