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The UN Trade and Development (UNCTAD) in its Global Trade Update said that the developing nations, particularly India and China, saw better than average trade expansion in the fourth quarter of 2024, while many developed nations experienced trade contractions during the same period. However, it has warned about a potential slowdown in global economy in upcoming quarters. The report showed that the global trade expanded by nearly $1.2 trillion in 2024, reaching $33 trillion a result of a 9 per cent rise in services trade and a 2 per cent increase in goods trade with India and China exhibiting stronger trade momentum in Q4 2024 while the US remained a key driver. 

The report noted that India recorded an 8 per cent quarterly imports growth in goods trade in Q4 2024 over the previous quarter and an annual imports growth of 6 per cent, while the quarterly exports growth in goods stood at 7 per cent and annual exports growth was 2 per cent. As per the report, Indian service imports showed 7 per cent quarterly growth and an annual growth of 10 per cent in Q4 2024, while quarterly exports growth stood at three per cent and annual exports growth in services stood at 10 per cent. It indicated that goods trade imbalances widened during 2024, driven by a growing United States deficit and a rising Chinese surplus fuelled by strong exports and steady demand. 

UNCTAD hinted trade to remains stable in early 2025 but also warned about possible trade disruptions on the back of mounting geoeconomic tensions, protectionist policies, and trade disputes. In the first months of 2025, there has been a noticeable reduction in demand for container shipping, as reflected by a significant decrease in the Shanghai Containerized Freight Index (SCFI). While these indices suggest lower shipping costs, they also indicate reduced global demand for both intermediate inputs and processed goods. The decline in the SCFI points to weaker trade volumes, signalling a slowdown in global economic activity. The report indicated that this slowdown may further suggest an incoming contraction in global trade and reduced economic activity, as lower demand for bulk shipping is typically associated with weaker industrial output and slower growth in key sectors.

As per UNCTAD, the growing trend of the implementation of protectionist trade policies and tariffs are expected to have significant repercussions on global and regional value chains and these disruptions could lead to shifts in production and sourcing patterns, as companies and countries adjust to new trade barriers and seek to mitigate the costs of these tariffs. It added that the prioritisation of national concerns and the urgency to fulfil climate commitments will likely continue to shape changes in both industrial and trade policies into 2025. Moreover, a rise in trade-restrictive measures and inward-looking industrial policies designed to support the production of sustainable and environmentally friendly products is expected to negatively affect the growth of international trade, particularly in strategic sectors and critical minerals.