The WTO said this was the third decline in the last 30 years. There was a drop of 12% during the global financial crisis of 2009 and a decline of 5% during the pandemic in 2020.

Merchandise exports were actually down 5% to 24.01 trillion USD but trade developments on the services side were more upbeat, with commercial services exports up 9% to 7.54 trillion USD.

In 2023, import demand was particularly weak in Europe, where the impact of higher energy prices and inflation was most intense.

WTO Chief Economist Ralph Ossa said, “We expect a gradual recovery in world merchandise trade volume in 2024 and 2025. Specifically, we expect merchandise trade to grow by 2,6% in 2004 and 3,3% in 2025.”

The WTO report warned of a risk of trade fragmentation due to conflicts and geopolitical tensions, especially in the Red Sea. According to the WTO, despite a decline in maritime transport through the Red Sea and the Suez Canal, through which 12% of global trade normally passes, shipping hasn’t been disrupted and maritime freight rates are stable.

The WTO also warned of a risk of rising oil prices if the conflict in Gaza spreads.