Despite a projected increase of $1 trillion from 2023, uncertainties for 2025, including escalating trade wars, geopolitical tensions, and changing policies, are causing uncertainty in the outlook.
According to the UN Conference on Trade and Development (UNCTAD)’s Global Trade Update, the growth is driven by a strong 3.3% annual increase, with trade in services contributing significantly by surging 7%, adding $500 billion to the total value.
While goods trade has grown at a slower rate of 2%, it has not yet reached its peak in 2022.
While the trade performance in 2024 showed resilience, the forecast for next year is uncertain, mainly due to potential policy changes in the United States under the new administration.
UNCTAD warned that the outlook for 2025 is clouded by potential policy shifts in the US, such as broader tariffs that could disrupt global value chains and impact major trading partners. These measures could lead to retaliation and have ripple effects on industries and economies along the entire supply chain.
The countries most vulnerable to changes in US trade policy are those with large trade surpluses and high tariff barriers, including China, India, the European Union, and Vietnam.
Other nations with trade surpluses, such as Canada, Japan, Mexico, and South Korea, may also face risks, despite having lower tariffs on US imports or established trade agreements.
Adding to the uncertainty are the trajectory of the US dollar and potential shifts in macroeconomic policies, further contributing to global trade concerns.
The report shows that developed economies led the growth in the third quarter of 2024, while developing economies faced challenges with declining imports and South-South trade.
Certain sectors also struggled, with energy trade declining 2% in Q3 and 7% over the year, metals trade contracting 3%, and the automotive sector experiencing a 3% drop in the quarter, despite an expected 4% annual growth.
However, high-growth sectors like information and communications technologies (ICT) and apparel recorded strong growth, surging 13% and 14% respectively in the third quarter.
On a national level, Japan and the United States saw a 5% and 4% increase respectively in goods exports in the third quarter, while the European Union sustained growth in services traded.
Developing economies, on the other hand, faced challenges, with China’s exports declining by 2% in Q3, although its services sector saw a 9% annual increase in exports. India also experienced quarterly declines in goods trade but posted modest annual gains, while trade in East Asia remained stagnant with flat imports and a marginal 1% growth in exports.
UNCTAD Secretary-General Rebeca Grynspan stressed the importance of strategic policy action in developing economies to diversify trade and invest in high-value sectors to mitigate risks.
“Trade remains a crucial aspect of sustainable development,” she said. “To take advantage of the opportunities in 2025, developing economies need coordinated support to navigate uncertainty, reduce dependencies, and strengthen their connections to global markets.”