AIR CARG O WEEK


MARKET FORECAST


GLOBAL TRADE OUTLOOK AND STATISTICS IN 2025


THE WTO IS ANTICIPATING A REBOUND IN GLOBAL MERCHANDISE TRADE IN 2025 AS IT SEES A MODERATE EXPANSION IN THE YEAR.


“The World Trade Organization is the international body dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible, with a level playing field for all its members.”


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he World Trade Organization (WTO) has slightly revised its forecast for global merchandise trade growth in 2024, raising it to 2.7% from the previous estimate of 2.6%, with a further 3.0% growth expected in 2025, down from the earlier prediction of 3.3%. While demand for traded


goods in Europe was weaker than expected, Asia saw stronger- than-anticipated growth. World real GDP growth is projected to stay steady at 2.7% from 2023 to 2025, with Asia leading the growth in 2024 at 4.0%, while Europe lags behind at just 1.1%. Notably, Germany’s GDP dipped into negative growth in the second quarter of 2024. In the first half of 2024, the value of global merchandise trade


in US dollars remained almost unchanged compared to the same period a year prior, while services trade grew by 8% in the first quarter. Rising trade volumes, combined with stable trade values, indicate a 2.6% drop in export and import prices. Among commercial services, the travel sector saw the highest growth, increasing by 19% in Q1 2024. By mid-2024, inflation had eased enough for central banks to


begin cutting interest rates. This decline in inflation is expected to boost real household incomes and consumer spending, while lower interest rates should spur


investment by businesses. However,


risks to the outlook are predominantly negative, driven by regional conflicts, geopolitical tensions, and policy uncertainty. A potential escalation of conflict in the Middle East could disrupt shipping and push energy prices higher, given the region’s critical role in petroleum production. The WTO expects global merchandise trade to rebound in early


2024, with a 2.3% year-on-year increase in the first half of the year, followed by moderate expansion in 2025. This recovery follows a downturn in 2023, caused by high inflation and rising interest rates. The WTO now forecasts a 2.7% increase in merchandise trade volumes in 2024 and 3.0% growth in 2025. Global GDP growth is projected to remain steady at 2.7% for both years. With inflation easing, central banks in advanced economies are cutting interest


rates, which should support consumption and


investment, aiding global trade recovery. However, downside risks, such as geopolitical instability and regional conflicts, continue to pose challenges to this outlook. These revised forecasts align with the WTO’s Global Trade Outlook and Statistics report from April, which predicted similar growth trends for merchandise trade and GDP.


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Macroeconomic conditions The global economy is gradually improving, but significant differences in economic performance persist across regions. The ability of policymakers to achieve a “soft landing” largely hinges on the timing and extent of interest rate cuts. Recently, several major economies, including the United States, European Union, and South Africa, have begun reducing interest rates as inflationary pressures ease. In contrast, China has introduced robust stimulus measures to


combat weak domestic demand. These include interest rate cuts, reductions in bank reserve requirements, and actions to lower the cost of existing mortgages. In early August, disappointing US payroll data led the Federal Reserve to initiate monetary easing with a 50 basis point (0.5%) interest rate cut in September. The European Central Bank (ECB), which had already reduced its main policy rate by 25 basis points in June, implemented an additional 25 basis point cut in September due to ongoing economic weakness. Japan and Brazil stand out as exceptions, both raising interest


rates to combat persistent inflationary pressures. In terms of economic performance, the United States saw annualised GDP growth rise to 3.0% in Q2, up from 1.4% in Q1. The eurozone experienced a modest uptick, with growth increasing to 1.3% in Q2 from 1.1% the previous quarter. Japan’s economy rebounded with 3.1% growth in Q2, following a 2.3% contraction in Q1. Meanwhile, China’s growth slowed to 2.8% in Q2 from 6.1% in Q1, though year- on-year growth still reached 4.7%. Germany and Argentina are notable weak spots in the global


economy. Germany’s output contracted at an annualised rate of -0.3% in Q2, reflecting deeper struggles in its economy, while Argentina saw steep declines, with output falling 8.4% in Q1 and 4.8% in Q2. In Germany, the Hamburg Commercial Bank/S&P Global Manufacturing Purchasing Managers’ Index (PMI), a key indicator of future trends in manufacturing, fell to a 12-month low in September, signalling significant challenges for the country’s industrial sector and raising concerns about a potential recession. PMIs in other countries, including the US, have also shown


signs of weakness in manufacturing, while the service sector has remained relatively resilient. Overall, while the global economy is gradually recovering, the outlook remains uneven, with regional variations in growth and policy responses shaping the trajectory of individual economies.


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