Global trade is projected to end the year 5 per cent down compared to last year’s record level, shrinking by about $1.5 trillion to below $31 trillion, the United Nations Conference on Trade and Development (UNCTAD) recently said in its Global Trade Update.

Due to factors like geopolitical tensions, escalating debt and widespread economic fragility, its outlook for next year remains ‘highly uncertain and generally pessimistic’.

Other elements weighing on trade include lower demand in developed countries, less trade in East Asia, an uptick in trade-restrictive measures, commodity price volatility and lengthening supply chains, particularly between China and the United States.

However, the report notes a few positive trends this year. These include a slight increase in trade volumes, suggesting resilient global demand for imports. Also, some developing economies, particularly Mexico and East Asian countries, have had opportunities to better integrate the supply chains affected by geopolitical concerns.

The report noted declines of 13 per cent in the textile industry and 11 per cent in the apparel industry in 2023.

Global trade patterns are increasingly being influenced by geopolitics, with countries showing preferences for politically-aligned trade partners, a trend termed ‘friend-shoring’. The trend has become more pronounced since late 2022, the report noted.

The report also highlighted a marked increase in trade concentration. “There has been an overall decrease in the diversification of trade partners, indicating a concentration of global trade within major trade relationships,” it noted.

It noted a significant uptick this year in trade-restrictive measures, especially non-tariff measures, driven by a resurgence of industrial policies and the pressing need for countries to fulfill climate commitments. These factors have prompted countries to favour policies that support domestic industries and reduce reliance on foreign supply chains.

“These inward-looking policies are anticipated to impede the growth of international trade,” the report added.

Fibre2Fashion News Desk (DS)

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