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According to a recent analysis by UNCTAD, there might be a 5 percent decline in global commerce by year's end compared to record levels set last year. This would translate into a fall of around $1.5 trillion, or less than $31 trillion.
Because of the ongoing geopolitical unrest, growing debt, and general economic instability, the forecast for the upcoming year is still quite unpredictable and generally bleak. The decline in global trade, however, can be attributed to a number of factors, such as a decline in demand in developed nations, a decline in trade in East Asia, an increase in trade restrictions, volatility in commodity prices, and the extension of supply chains, particularly between China and the US.
Notwithstanding these difficulties, the research points out certain encouraging aspects, such as a modest rise in trade volumes, which suggests a steady demand for imports throughout the world.
Certain developing economies, such as those in East Asia and Mexico, have discovered ways to improve the integration of supply chains that are impacted by geopolitical issues.
According to the analysis, there would be significant drops in the textile and clothing industries in 2023 of 13% and 11%, respectively. Global trade patterns are being increasingly influenced by geopolitics, as governments show a preference for politically allied trading partners. This phenomenon, known as "friend-shoring," has been more noticeable since late 2022.
In addition, there has been a noticeable increase in trade barriers, especially non-tariff barriers, which are mostly the result of the need for nations to fulfill their climate pledges and the revival of industrial policies. According to the paper, as a result, nations are implementing inward-looking policies to boost domestic businesses and lessen their reliance on foreign supply chains. This could have the unintended consequence of preventing the expansion of international commerce.
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