Research Reports

Strengthening G20 Value Chains: Leveraging Technology and Collaboration

Global trade in 2023 expanded to USD 30.5 trillion with USD 24 trillion of merchandise trade and USD 6.5 trillion of services trade. World merchandise trade, however, declined by 4.9% in value terms compared to the previous year, due to unfavorable trends in exchange rates and lower prices for primary commodities¹ According to the World Economic Forum, region-wise trade presented a mixed picture in 2023 as trade in advanced economies declined sharply; however, it increased in emerging markets such as China. In contrast, Latin America, Middle East, North Africa, and Sub-Saharan Africa experienced a contraction in trade.

Global trade is experiencing significant challenges such as geopolitical conflicts, dysfunctional appellate body of dispute settlement mechanisms of the World Trade Organisation (WTO), upcoming non-tariff measures such as the Carbon Border Adjustment Mechanism (CBAM), deforestation regulations, and others. Furthermore, health restrictions posed during the COVID19 pandemic, increasing trade protectionism, and geo-economic fragmentation driven by geopolitical conflicts led to an increase in shipping costs. With almost 90% of trade moving along maritime routes¹, increase in shipping costs had a significant impact on consumer prices across the globe. This relationship is also evident from an IMF study which postulates that the doubling of freight rates increases inflation by 0.7%³ .