The United Nations Conference on Trade and Development (UNCTAD) issued a new report this week which found that in 2023, global trade will contract by 5% compared to 2022, and which offered a mostly negative outlook for 2024.

The report estimated that this year will see total world commerce come in at about $30.7 trillion. The report projected that goods trade would decrease by roughly $2 trillion, or 8%, while the trade in services would increase by about $500 billion, or 7%.

The report attributed the decrease in trade globally in part, to an underperformance of exports from developing countries, as well as rising geopolitical conflicts hampering trade relationships.

The report said, “The war in Ukraine, the sanctions on the Russian Federation, and the de-risking in the US-China trade relationship are playing a significant role in shaping key bilateral trade trends. These factors not only impact the economies directly involved but also indirectly influence [the] trade dynamics of other economies.”

The report also asserted that commercial activity has been hampered by high interest rates in some economies.

Overall the UNCTAD noted that its forecast for trade internationally in 2024 would remain, “highly uncertain and generally pessimistic.”

In conclusion, the report said, “While certain economic indicators hint at potential improvements, persistent geopolitical tensions, high levels of debt, and widespread economic fragility are anticipated to exert negative influences on global trade patterns.”