Future Global Trade Resilience Amidst Intense Stress

In 2024, the global trade landscape underwent significant changes, with several regions adapting their trade relations to regional partners and diversifying supply chains.

Countries in Southeast Asia, such as Indonesia, Thailand, Vietnam, the Philippines, and Malaysia, have been actively participating in agreements like ASEAN and RCEP to promote intra-Asian trade. For instance, Indonesia abolished tariffs on US soybean meal, while Vietnam increased imports despite tariffs, demonstrating strong underlying demand. Meanwhile, many states are striving to reduce dependence on traditional markets, particularly due to disruptions from sanctions and conflicts like the Ukraine war, which exposed vulnerabilities in East-West trade relations and accelerated efforts to diversify supply chains and reduce global dependencies.

Asia and Latin America remain key trade drivers, but growth has slowed in many advanced economies. In contrast, developing economies, such as India, Vietnam, and Russia, have deepened trade ties with specific partners. For example, India's trade deficit with Russia increased in 2024, while economies like Australia and the EU are reducing reliance on traditional markets.

The trends towards diversifying trade networks have led to further shifts in trade networks. Nearshoring and friendshoring trends reversed in 2024, with firms diversifying trade networks across multiple regions. This diversification is evident in the EU's growing trade surplus with China, and the US trade deficit growing in the same year.

However, these changes have not been without challenges. Trade imbalances, evolving policies, and geopolitical tensions have emerged as new risks for global trade. The EU shifted to a trade surplus in 2024 due to energy price changes, but these trade imbalances could prompt new tariffs, restrictions, or investment shifts. The US-China trade deficit is widening, and China's trade surplus expanded in 2024.

The UN, shipping, supply chain, climate, inequality, resilience, and specific regions (China, Europe, Global, India, Russia, United States, Vietnam) may be affected by these changes. Africa's intra-regional trade is shrinking, reversing gains, and trade between Europe and Central Asia has declined, reflecting shifting demand.

Economic uncertainty may result from these trade trends. Governments are expanding tariffs, subsidies, and industrial policies, reshaping trade flows. Developing economies and strong services trade have contributed to the 2024 world trade expansion, with world trade expanding to a record $33 trillion, a 3.7% increase from 2023.

In conclusion, 2024 marked a year of significant shifts and challenges in global trade. As countries continue to adapt to these changes, it is essential to monitor these trends to understand their implications for the global economy and to develop strategies for resilience and growth.