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Global trade trends have “turned positive” after a challenging 2023, UN research finds, although fragility remains due to geopolitical tensions, industrial policies and rising shipping costs. 

Trade in goods was around 1% higher in the first quarter of this year than in Q4 2023, and growth is expected to reach 2% for the first half of 2024, according to a paper published this month by UN Trade & Development (UNCTAD). 

If sustained, this increase would add around US$250bn to the value of global goods trade for the first half of the year, and US$1tn across the whole of 2024. 

Though a “modest and gradual increase”, UNCTAD says the findings – which are underpinned by calming inflation rates and improving growth forecasts – suggest “a reversal of the downward macroeconomic trends that have characterised most of 2023”. 

Much of the recovery is driven by strong trade growth in developing countries in East Asia, where both imports and exports increased by 2% quarter-on-quarter. 

Further growth has been driven by strong performance in the Americas, while south-south trade also grew by 2% over the same period. 

Most sectors experienced a rebound in Q1, UNCTAD finds, particularly in chemicals, pharmaceuticals, textiles, and metals and minerals. 

It adds that demand for green energy-related technologies, such as electric vehicles, solar panels, batteries and high-end semiconductors, is likely to grow “substantially faster than average”. AI-related exports are also expected to increase rapidly. 

However, the forecast highlights several downside risks. Geopolitical tensions, concerns over the energy transition and the rise of AI could spur intervention by national governments, for instance by introducing trade-restrictive policies designed to protect domestic producers. 

The World Trade Organization says in a report published on July 8 that between October 2023 and May 2024, member states overall introduced more trade-facilitating measures than trade-restricting measures on goods. 

But director-general Ngozi Okonjo-Iweala warned that “a series of import-restricting measures announced too recently to be captured in the update looks set to affect a significant amount of world trade”. 

The UNCTAD forecast also notes a “noticeable rise in the political proximity of trade”, whereby trade increasingly occurs between countries with comparable geopolitical stances – a practice known as friendshoring. 

It says this phenomenon has resulted in a concentration of flows within major trade relationships, though adds the trend appears to have stabilised during the second half of 2023 and may be starting to soften. 

At the same time, the uptick in goods trade was not reflected across all regions. Exports from African, Pacific and south-west Asian regions dropped in Q1, and saw a “significant decline” in intra-regional trade.