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Global goods trade is set to return to growth this year after a tepid 2023, UN research has predicted.

Preliminary data suggests that the value of goods traded around the world grew again at the end of last year following a prolonged slump from the steep price rises seen in 2022, according to the UN Conference on Trade and Development (UNCTAD).

Forecast global GDP growth of around 3% for this year and recent jumps in containerised shipping rates suggest that trade will rebound through the next nine months, the agency says.

“Available data for the first quarter of 2024 suggests a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts,” UNCTAD says. “Additionally, rising demand for environmental goods, particularly electric vehicles, is expected to bolster trade this year.”

But the agency warns that “geopolitical tensions and supply chain disruptions persist as pivotal factors influencing bilateral trade trends and require ongoing scrutiny”.

“Disruptions in shipping routes, particularly those related to security issues in the Red Sea and the Suez Canal, as well as adverse climate effects on water levels in the Panama Canal, carry the potential to escalate shipping costs, prolong voyage times and disrupt supply chains.”

The value of global goods trade soared in 2022 as economies roared back to growth following the sudden plunge in global commerce during the first year of the Covid-19 pandemic.

While UNCTAD’s measurements of goods trade volume are largely back in line with pre-pandemic performance, the value of those goods remains much higher due to higher commodity prices and inflation.

Although the value of goods traded globally last year fell by about US$1.3tn compared to 2022, it is still much higher than pre-pandemic levels. The fall is also less than the US$2tn plunge it previously forecast.

The only broad categories of goods that saw an annual increase in traded goods value were pharmaceuticals, precision instruments, road vehicles and transport equipment.

The decline in values during 2023 was spread across most regions, but data crunched by UNCTAD shows that almost all regions saw a return to growth in the final quarter, which the body says signals “the end to the decline in global trade of goods”.

The only major economic region where imports and exports extended their falls into the fourth quarter was the European Union – although the data does not include intra-EU trade. The US and Japan remained flat, while China, India and South Korea all recorded a modest uptick.

Latin America is also lagging, recording falls in both imports and exports. Sanctions-hit Russia likewise saw quarterly falls capping a 21% drop in exports over the year.

Sluggish trade activity, particularly in the first half of the year, fed into lacklustre trade finance performance at several lenders, according to a recent analysis of financial reports by GTR.

UNCTAD also recorded a continuation of a trend where countries conduct trade with nations close to them geographically, which it calls trade concentration.

The trend gained momentum in the second half of 2022 and peaked in the third quarter of last year, according to UNCTAD, but softened dramatically in the last three months of 2023. Similarly, friendshoring, referring to trade between countries that are politically aligned, fell during this period following a gradual rise since early 2022.

As signalled by UNCTAD last year, trade dependency between several countries deepened, most notably Russia’s dependence on China, which rose by 7.1%.