Global trade is poised to achieve a historic $33 trillion in 2024, marking a significant milestone despite ongoing economic and geopolitical challenges. The United Nations Conference on Trade and Development (UNCTAD) revealed on Thursday that global trade is expected to grow by 3.3% this year, with services trade playing a key role. However, this record performance may be short-lived as rising risks, including trade wars and shifting policies, threaten to cloud the outlook for 2025.

According to UNCTAD's latest Global Trade Update, the projected $33 trillion trade volume for 2024 represents a $1 trillion increase over 2023. A major contributor to this growth was the trade in services, which surged by 7%, accounting for half of the total expansion and adding an additional $500 billion to the global trade value. In contrast, trade in goods grew by only 2%, falling short of its 2022 peak.

While the performance for 2024 shows resilience, concerns are mounting for 2025, driven primarily by potential policy shifts in the United States. UNCTAD warned that the outlook for next year is uncertain, particularly due to the possibility of broader tariffs under the incoming US administration. Such changes could disrupt global value chains, impact key trading partners, and trigger retaliatory measures, further destabilizing the global trading system. Even the mere threat of tariffs, according to UNCTAD, can create unpredictability, undermining trade, investment, and economic growth.

Countries most vulnerable to shifts in US trade policy are those with large trade surpluses with the US, such as China, India, the European Union, and Vietnam. The UN body highlighted that these countries, which have higher tariff barriers, could face significant challenges. Additionally, other nations with substantial trade surpluses like Canada, Japan, Mexico, and South Korea, even though they have lower tariff barriers or established trade agreements, are not immune to the risks.

Adding to the uncertainty is the future trajectory of the US dollar and macroeconomic policy shifts, which are likely to influence global trade dynamics.

In the third quarter of 2024, developed economies led the growth, buoyed by stable demand and favorable business conditions. However, developing economies, traditionally strong drivers of global trade, faced challenges. South-South trade saw a decline, and imports in developing regions contracted. The energy sector also experienced setbacks, with trade in energy down by 2% in Q3 and 7% over the year. Similarly, metals trade shrank by 3%, and the automotive sector recorded a 3% drop in Q3, despite an expected 4% annual growth.

On a more positive note, high-growth sectors like information and communications technologies (ICT) and apparel saw strong growth, rising 13% and 14%, respectively, in the third quarter.

Regionally, Japan saw a notable increase in exports, with a 5% rise in goods exports and a 13% annual jump in services exports. The United States also recorded a 4% rise in merchandise imports. The European Union sustained its growth in services trade, with positive projections for the year.

However, developing economies like China and India faced challenges. China's goods exports dropped by 2% in Q3, although its services sector saw a 9% rise. India also experienced quarterly declines in goods trade but posted modest annual gains. Trade in East Asia largely stalled, with flat imports and a slight 1% growth in exports.

UNCTAD Secretary-General Rebeca Grynspan emphasized the importance of strategic policy action in developing economies to diversify trade and invest in high-value sectors. "Trade remains a cornerstone of sustainable development," she stated. "To seize opportunities in 2025, developing economies need coordinated support to navigate uncertainty, reduce dependencies, and strengthen their links to global markets."