India and China emerged as key drivers of global trade momentum in the fourth quarter of 2024, even as the broader economic landscape exhibited signs of fragility, according to the latest Global Trade Update from the United Nations Conference on Trade and Development (UNCTAD). The report highlighted a significant expansion in global trade, which reached a record $33 trillion in 2024, driven by a 9 per cent rise in services trade and a modest 2 per cent increase in goods trade.

Developing nations, particularly India and China, outperformed their global counterparts, while many advanced economies struggled with contractions. India recorded an 8 per cent quarterly increase in goods imports in Q4 2024, with exports rising 7 per cent during the same period. On an annual basis, India’s goods imports grew by 6 per cent , while export growth stood at 2 per cent . China also maintained strong trade momentum, with a rising surplus fueled by robust exports and stable domestic demand.

Mixed Trade Trends Among Major Economies

While China and India showed continued strength in exports, other major economies displayed mixed trends. South Korea, despite being one of the top performers on an annual basis, experienced a slowdown in export growth. The United States remained a key player, with import growth remaining positive in Q4 2024, though its export growth turned negative. Meanwhile, Japan, Russia, South Africa, and the European Union all reported declining import growth on both a quarterly and annual basis.

India’s Services Trade Remains Strong

Services trade, which had been a key driver of global economic activity throughout the year, showed signs of slowing in Q4 2024. However, India remained an exception with strong growth in the sector. The country recorded a 7 per cent quarterly increase in services imports and a 10 per cent annual rise. Services exports from India also grew by 3 per cent quarterly and 10 per cent annually, underscoring its resilience in the global services market.

Shipping Demand Declines, Signaling Slowdown

Despite strong trade figures in late 2024, UNCTAD warned of a potential economic slowdown in the upcoming quarters. A noticeable reduction in global shipping demand, reflected by a significant drop in the Shanghai Containerized Freight Index (SCFI), suggests weakening trade volumes and global economic activity. The Baltic Dry Index, which tracks bulk commodity shipping rates, also remained at relatively low levels compared to 2024, signaling potential contractions in industrial output.

Trade Imbalances and Geopolitical Risks Rise

Trade imbalances widened in 2024, with the United States grappling with a growing deficit while China’s surplus expanded due to strong exports. The report cautioned that evolving trade policies, geopolitical tensions, and economic uncertainties could further disrupt global trade in 2025. Mounting geo-economic challenges, protectionist policies, and escalating trade disputes pose significant risks to trade stability.

Protectionism Reshaping Global Supply Chains

A growing trend of protectionist measures, including broad tariffs targeting specific countries and industries, has started to reshape global supply chains. The imposition of new trade restrictions, particularly in critical sectors such as steel, aluminum, and sustainable energy products, could lead to significant shifts in production and sourcing patterns.

Uncertain Outlook for 2025

Looking ahead, global economic activity is expected to maintain modest momentum, but trade forecasts remain uncertain. While China’s economic stimulus and an expected easing in global inflation could provide some relief, policy disruptions and geopolitical challenges continue to cloud the trade outlook for 2025. UNCTAD emphasized the need for balanced policy decisions and stronger multilateral cooperation to safeguard global trade and economic stability.