While Global trade contracted 3%, with hopes to rebound in 2024, intra-African trade increased by 6 percent in 2023.
The United Nations Conference on Trade and Development (UNCTAD) disclosed this in its latest Global Trade Update.
Experts have linked the development seemingly to the effects of the desired objective of the Africa Continental Free Trade Area (AfCFTA).
AfCFTA was established in 2018, and kick-started in 2021, to create a single market for goods and services, facilitated by movement of persons in order to deepen the economic integration of the African continent, connecting 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion.
The latest Global Trade Update released by UNCTAD, on Thursday, noted that while global trade contracted by 3 percent in 2023, trade between African economies bucked the global trend by increasing 6 percent in the year.
The United Nations trade agency, however, expects international trade to rebound in 2024.
It noted that preliminary figures indicate a $1 trillion contraction in global trade in 2023, driven primarily by subdued demand in developed nations and weaker trade within the East Asia and Latin American regions, adding that while trade in goods decreased during 2023, trade in services continued to grow, signaling resilience amidst challenging conditions.
UNCTAD stated: “In 2023, global trade saw a 3% contraction, equaling roughly $1 trillion, compared to the record high of $32 trillion in 2022. Despite this decline, the services sector showed resilience with a $500 billion, or 8%, increase from the previous year, while trade in goods experienced a $1.3 trillion, or 5%, decline compared to 2022.
“The fourth quarter of 2023 marked a departure from previous quarters, with both merchandise and services trade stabilizing quarter-over-quarter. Developing countries, especially those in the African, East Asian and South Asian regions, experienced growth in trade during this period.
“While major economies generally saw a decline in merchandise trade throughout 2023, certain exceptions emerged, like the Russian Federation, which exhibited notable volatility in trade statistics. Towards the end of 2023, trade in goods saw growth in several major economies, including China (+5% imports) and India (+5% exports), although it declined for the Russian Federation and the European Union.
“During 2023, trade performance diverged between developing and developed countries, with the former experiencing a decline of approximately 4% and the latter around 6%. South-South trade, or trade between developing economies, saw a steeper decline of about 7%. However, these trends reversed in the last quarter of 2023, with developing countries and South-South trade resuming growth while trade in developed countries remained stable.
“Regionally, trade between African economies bucked the global trend by increasing 6% in 2023, whereas intra-regional trade in East Asia (-9%) and Latin America (-5%) lagged behind the global average.”
On the prospects for 2024, UNCTAD said: “Available data for the first quarter of 2024 suggests a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts. Additionally, rising demand for environmental goods, particularly electric vehicles, is expected to bolster trade this year.”
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