World trade is expected to grow this calendar year in terms of volumes after a difficult 2023 but in dollar terms it is still expected to decline 1.2% on year, according to a report by trade policy think tank.
The World Trade Organisation (WTO), in its Global Trade Update and Statistics, said that after a 1.2% decline in world goods trade volumes last year, there will be a growth of 2.6% this year. The 1.2% drop in trade volumes had resulted in 5% contraction in trade in value terms to $24.01 trillion. For 2024, while predicting the growth, the report has made no mention of what will be the value of global merchandise or services trade.
The Global Trade Research Initiative’s (GTRI) report forecasts a 1.2% drop in world merchandise trade values in 2024, over 2023. “This forecast uses historical trends showing how trade volumes relate to trade values. In 2023, there was a 1.2% fall in world trade volume and a 5% decrease in value compared to the year before,” the report said.
The WTO forecast does not include impact on trade values, which is a commonly used parameter to measure trade performance.
Calculating the trade value is straightforward, as it involves adding up the values of all transactions. However, calculating trade volume is not as simple as just adding up quantities of different goods like iron ore and diamonds, which could lead to inaccurate conclusions, GTRI said.
The WTO employs a complex method to calculate changes in trade volumes. It adjusts the value of trade to account for changes in prices, a process known as deflation. This involves using specific price indices for different categories of goods and services to ensure that the measured trade volume reflects the actual quantity of goods and services traded, rather than their price changes.
In 2023, merchandise exports totalled $23.8 trillion, while imports were $24.2 trillion. This represents a decrease of 4.5% in exports and 5.4% in imports compared to 2022.
For commercial services, exports rose to $7.8 trillion and imports to $7.2 trillion in 2023. This category saw an increase of 10.8% in exports and 10.9% in imports from the previous year.
Overall, the total merchandise and services trade slightly decreased in 2023, with exports at $31.6 trillion (down by 1.1%) and imports at $31.5 trillion (down by 2.1%) compared to 2022.