Global trade saw a significant boost in the first half of this year, growing by an estimated $300 billion, according to a recent report released by the United Nations Conference on Trade and Development (UNCTAD). Despite this positive trend, the report warns that the future remains uncertain due to ongoing policy instability, geopolitical tensions, and signs of slowing global growth in the latter half of the year.
The latest Global Trade Update highlights that global trade rose by approximately 1.5 percent in the first quarter and is projected to grow by 2 percent in the second quarter. This growth was partly driven by price increases, contributing to the overall rise in trade value. However, trade volumes saw a modest growth of just 1 percent, with prices for traded goods edging up in both the first and second quarters.
Services trade emerged as the primary driver of growth, rising 9 percent over the last four quarters. This surge underscores the increasing importance of the services sector in the global economy, particularly in areas such as digital services, tourism, and finance.
The report also revealed mixed trends in merchandise trade among major economies. Developed economies outpaced developing countries in the first quarter, attributed to a 14 percent surge in imports by the United States and a 6 percent rise in exports from the European Union. Meanwhile, the United States experienced a widening trade deficit over the last four quarters, contributing to deeper trade imbalances.
UNCTAD’s report highlighted the heightened risks of trade fragmentation due to recent U.S. tariffs, including a 10 percent baseline tariff and additional duties on steel and aluminum. The report warns that a further wave of unilateral actions could trigger increased trade tensions globally.
As the global economy navigates through these uncertainties, the report emphasizes the need for collaborative efforts to stabilize trade policies and address geopolitical tensions. Such measures are crucial to sustaining growth and fostering a more inclusive global trading system that benefits all economies, especially those in the developing world.
