Global trade hit a new high in 2024, reaching a record $33 trillion, marking a 3.7% increase, or $1.2 trillion, according to the latest Global Trade Update by the United Nations Conference on Trade and Development (UNCTAD). While the report highlights the robust growth of trade, it also raises concerns about the uncertainty facing the global economy in 2025.
The growth was driven by a 9% surge in the services sector, which contributed an additional $700 billion, making up nearly 60% of the total increase. Meanwhile, trade in goods grew by 2%, contributing an additional $500 billion to the overall figure. Despite these gains, the report warns that the global trade environment faces rising risks from trade imbalances, changing policies, and ongoing geopolitical tensions.
Widening Gap Between Developing and Advanced Economies
UNCTAD noted that the gap between developing and advanced economies continues to widen. While Asia and Latin America remain key drivers of global trade, many advanced economies are experiencing a slowdown in growth. South-South trade—the exchange between developing countries—has remained relatively strong, but Africa’s intra-regional trade is shrinking, reversing previous gains.
Moreover, trade between Europe and Central Asia has declined, reflecting shifts in demand across global markets. These changing dynamics are reshaping the global trade landscape, particularly as new policies and strategies emerge.
Shifting Trade Policies and Economic Security Concerns
Governments worldwide are increasingly focusing on industrial policies, tariffs, and subsidies, reshaping the flow of trade. The US, European Union (EU), and other countries are linking trade measures to economic security and climate change goals, while China is using stimulus policies to maintain export momentum.
The report highlights that industrial policies, which focus on the development of specific sectors, are reshaping crucial industries like clean energy, technology, and critical raw materials. However, these policies could distort competition, creating new challenges for global trade.
Risks of Global Fragmentation in 2025
Looking ahead, UNCTAD warns that the global trade system faces the risk of fragmentation in 2025. Nations may increasingly form isolated trade blocs, making it difficult to maintain an integrated global economy. Governments and businesses will need to navigate policy shifts carefully to prevent such fragmentation while ensuring long-term growth.
The actions taken in the coming years will determine the resilience of global trade, with UNCTAD emphasizing the importance of fostering collaboration and managing economic policies without compromising the overall stability of the global trade system.
hile global trade has experienced significant growth in 2024, the road ahead for 2025 remains uncertain, with geopolitical tensions, evolving policies, and trade imbalances posing new risks to the global economy. How countries adapt to these challenges will shape the future of international commerce for years to come.
