The latest Global Trade Update (July 2024) from UNCTAD reveals a landscape of recovery and change in global trade. As we navigate through the complexities of a post-pandemic world, export credit agencies (ECAs) stand at the forefront of ensuring smooth trade operations, especially in an environment characterised by uneven growth and shifting geopolitical tides.
Global Trade Recovery
During the first quarter of 2024, global trade exhibited signs of recovery, though the growth was uneven across regions and sectors. Developing countries, especially in Asia, outperformed their developed counterparts. However, the growth was not uniformly spread, as trade in regions like Africa and Europe lagged behind.
The increase in trade was primarily driven by exports from China, India, and the United States, with a noticeable uptick in AI-related products and green energy goods. Despite this positive trend, risks such as rising geopolitical tensions, industrial policies, and supply chain disruptions continue to pose challenges.
Key Trends Influencing Global Trade
1) Developing Countries Outperforming: Developing economies, especially in Asia, have experienced a robust recovery. This is partly due to strong exports from major players like China and India. These countries have capitalized on high demand for technology, green energy products, and other growth sectors. The trend is particularly evident in South-South trade, which increased by 2% quarter-on-quarter.
2) Sectoral Divergences: Different sectors are recovering at different rates. While industries related to green energy and artificial intelligence (AI) are seeing substantial growth, traditional sectors like transport and communication equipment are facing challenges. This sectoral divergence reflects broader changes in global demand and supply chains, as well as ongoing geopolitical uncertainties.
3) Regional Disparities: The report highlights significant regional variations. East Asia and the Americas have shown relatively strong performance, whereas trade in Africa and Europe remains subdued. These disparities are driven by a combination of economic policies, infrastructure capabilities, and the varying impacts of geopolitical factors across regions.
4) Risks and Challenges: Despite positive signs, global trade faces several risks. Rising geopolitical tensions, the increasing trend of friendshoring (where countries trade more with politically aligned partners), and the lingering impacts of industrial policies are all factors that could disrupt trade flows. Additionally, the supply chain disruptions that plagued the early pandemic years have not fully resolved, continuing to create bottlenecks in key industries.
Role of Export Credit Agencies
In this volatile environment, ECAs play a crucial role in mitigating risks and fostering confidence among exporters and importers. By providing credit guarantees and insurance, ECAs help bridge the gap between uncertain trade environments and the need for economic growth. Their understanding of creditworthiness across borders is more critical than ever, as they navigate through the complexities of emerging trade dynamics.
Wiserfunding in action
At Wiserfunding, we empower export credit agencies to navigate these complexities with confidence. Our tools offer a comprehensive understanding of creditworthiness across borders, enabling ECAs to make informed decisions in a rapidly changing global trade landscape. As global trade continues to evolve, the role of ECAs will only grow in importance, ensuring that trade flows remain steady and robust despite the challenges ahead.
Learn more about our solutions for Export Credit
Source: https://unctad.org/system/files/official-document/ditcinf2024d2.pdf
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