Global Trade Expands by $33tn in 2024: UNCTAD

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The dynamics of global trade are changing as countries like China and India perform better than developed economies.

Global trade hit a new record of $33 trillion in 2024, up 3.7% from 2023, due to an growth in the service industry.

Based on the latest Global Trade update of the United Nations Conference on Trade and Development (UNCTAD), services contribute $700 billion or around 60% of the total exchange expansion and increase the growth by 9% for the year. Meanwhile, there was an increase in goods traded by 2%, contributing $500 billion.

UNCTAD is a permanent intergovernmental body with 190 member states representing countries globally. It aims to help developing countries integrate beneficially into the global economy and address development challenges through trade and investment.

The report stated that they expect an upward trend to continue during the first quarter of 2025, expanding on the $33 trillion global trade value in 2024.

UNCTAD’s analysis highlighted that the dynamics of international trade are changing as developing nations like China and India perform better than developed economies.

Research by the economic think tank Global Technology Research Institute (GTRI) shows that China has surpassed the United States as India’s largest trading partner in FY 2023-24, with $118.4 billion in two-way trade.

Their growth was due to strong exports and domestic demand, which helped developing economies maintain their pace as many developed countries experience exchange contractions.

China’s trade surplus increased dramatically in 2024 thanks to robust exports. The United States trade deficit widened because of its growing reliance on imports.

South-South trade, which means exchanges between developing economies, was the main factor for the global trade expansion.

In 2024, services trade grew by 9% more than goods trade, contributing around $700 billion to the global exchange growth. This sector’s resilience contrasts with goods trade, which increased by only 2%, adding around $500 billion.

The goods trade growth slowed in the fourth quarter, and the service trade maintained strong momentum.

Even though there are signs of overall development, UNCTAD warns of significant trade barriers. High tariffs still prevent developing countries from accessing markets, especially in the agricultural and manufacturing industries.

The report states that high import tariffs increase costs for consumers and businesses, potentially preventing growth.

It added that tariff escalation, where processed goods get higher taxes than raw materials, is one of the biggest barriers to industrialization in developing countries.

Agricultural exports from developing countries continue to face high import taxes, an average of almost 20%. Exports of clothing and textiles have some of the highest tariff rates, which reduces their ability to compete.

UNCTAD warned that in 2025, there will be disruption in international trade due to geopolitical tensions and trade disputes.

Major economies, including the US and China, impose retaliatory tariffs, which could impact the trade flow.

The United States had started a trade war with its three largest trading partners, Mexico, Canada, and China, spiraling financial markets as the US faces the possibility of renewed inflation and uncertainty for businesses.

Trump reduced the Canadian energy tariff to 10% and put 25% duties on Canadian and Mexican goods. Additionally, he doubled the tariffs to 20% he imposed on Chinese goods last month.

Many governments prioritize crucial minerals and renewable energy, which may affect trade relations as countries fight for resources and technology.

The report also identified several possible tailwinds, including China’s planned economic stimulus and decline in global inflation, which could encourage trade growth.

Trade growth varied across industries in 2024. While the energy industry faced a steep decline, the office equipment and pharmaceuticals sector has above-average growth. Agri-food, transportation, and communication equipment had significant growth in the third quarter, while retail and extractive saw declines.

The report highlights that the US continues to have the largest trade deficit, and China has the largest surplus. The European Union (EU), which previously had a deficit, went to surplus due to the surplus in chemicals and related products and a shift in the balance for other manufactured goods.

Bilateral trade imbalances between the US and China contribute to global economic uncertainty.

As global trade enters 2025, policymakers face the challenge of balancing with economic development and growing protectionism, which is the policies put forth by the government that restrict international trade to help domestic industries. UNCTAD underlined the significance of multilateral cooperation and strategic trade policies to maintain momentum and manage new threats.