Middle East — The Middle East is poised to become the fastest-growing hub for merchandise imports globally and the second-fastest for exports by 2025, despite ongoing regional conflicts that create instability and uncertainty.
According to the World Trade Organization (WTO), Asia will see the most rapid growth in exports this year, although the WTO has revised its global trade growth forecast for 2025 down to 3% from an earlier estimate of 3.3%. For 2024, the merchandise trade growth forecast has been slightly increased to 2.7%, up from 2.6%.
The WTO’s bi-annual report, “Global Trade Outlook and Statistics,” indicates that potential risks to these forecasts stem from geopolitical tensions, regional conflicts, and policy uncertainties.
Regional Growth Projections
By 2025, Asia’s exports are expected to grow by 7.4%, followed by the Middle East at 4.7%, South America at 4.6%, and the Commonwealth of Independent States (CIS) at 4.5%. In stark contrast, Europe is projected to experience a decline in exports of -1.4%. On the import side, the Middle East is forecasted to lead with a 9% growth, followed by South America (5.6%) and Asia (4.3%).
However, any escalation in conflicts in the Middle East could have widespread repercussions, potentially disrupting shipping routes and raising energy prices due to increased risk premiums. The WTO noted that while the impact of recent regional crises has been contained, broader conflicts could heighten risks to energy supplies, significantly affecting importing economies and dampening overall trade.
Global Trade Trends
The first half of 2024 saw a 2.3% year-on-year increase in global trade, rebounding from a 1.1% decline in 2023, driven by high inflation and rising interest rates. However, the Global Trade Research Initiative (GTRI) predicts a 1.2% decline in the value of global merchandise trade in 2024, influenced by geopolitical uncertainties. In 2023, the U.S. dollar value of global merchandise trade fell by 5% to $24.01 trillion, a decline largely offset by a 9% rise in commercial services trade, which reached $7.54 trillion.
Regional Economic Growth
Real GDP growth at market exchange rates is expected to remain steady at 2.7% between 2023 and 2025. Asia is likely to be the fastest-growing region in 2024, with an expected output increase of 4%, while Europe is anticipated to lag at 1.1%, particularly affected by weak performance in Germany.
The report highlights that Europe continues to exert a drag on global merchandise trade, with negative export performance primarily in the chemicals sector and a contraction in automotive exports raising concerns over supply chain disruptions. Additionally, a notable decline in machinery imports from China has been observed across several geopolitically aligned economies, including the U.S., South Korea, and Japan. In contrast, imports from India and Vietnam are on the rise, indicating their emerging roles as key trade partners.
As Asia’s exports rebound—driven by key manufacturing economies like China, Singapore, and South Korea—the overall trade landscape remains complex, shaped by both regional dynamics and global economic conditions.