Here we are again, back for the 2024 installment in our series looking at the current and future trends we think will be the most influential on global trade in the year ahead. The trends that make the list cover a broad range of topics that span economic, operational, strategic and technological categories. The aim is to gather the key things that will affect those working in the field of international trade in all sectors.
Some of these topics keep reappearing year after year, due to new developments and their continued place of prominence in the minds of global trade practitioners. This year the atmosphere of volatility and uncertainty continues, leaving many to question the value in forecasting at all. But, as global economist Peter Hall put it:
“Here’s the deal: forecasting is alive and well, if the impact of structural changes is properly understood. Data and cyclical fundamentals together show that the global economy is stronger than news reports have indicated. This will help it to absorb higher interest rates without drastic fallout, and to continue growing for a number of years to come. To do this successfully, more capacity will be needed to deal with rising demand.” – Watch the full video “Is Forecasting Passe?”
Read on for our 10 2024 trends.
Curious about our past predictions? Check out what we thought 2017-2023 had in store.
- 10 global trade trends we’ll be watching in 2023
- 10 global trade trends we’ll be watching in 2022
- 10 global trade trends we’ll be watching in 2021
- 10 global trade trends we’ll be watching in 2020
- 10 global trade trends we’ll be watching in 2019
- 10 global trade trends we’ll be watching in 2018
- 10 global trade trends we’ll be watching in 2017
1. 2024 global trade outlook “uncertain but pessimistic”
Not exactly a cheerful headline. The United Nations Conference on Trade and Development (UNCTAD) released its Global Trade Update on December 11, projecting a highly uncertain and generally pessimistic outlook for 2024.
Factors contributing to this outlook include ongoing geopolitical tensions, escalating debt, economic fragility, lower demand in developed countries, reduced trade in East Asia, an increase in trade-restrictive measures, commodity price volatility, and lengthening supply chains, especially between China and the United States.
Despite these challenges, the report notes some positive trends in 2023, including a slight increase in trade volumes, indicating resilient global demand for imports, and a $500 billion growth in trade in services, boosted by delayed COVID-19 recovery.
The report also highlighted the impact of “friend-shoring, and a general decrease in the diversification of trade partners. For more on friend-shoring, skip to Trend 6.
The update provides a mixed picture across economic sectors. Looking ahead to 2024, the commodities sector faces continued uncertainty due to regional conflicts and geopolitical tensions. Overall, the report paints a complex and challenging landscape for global trade in the coming year.
2. Inflation and the global economy
The global economy remains fragile and uncertain, revealing and worsening structural weaknesses in an interconnected global system. Again, we need to look to the emerging trend of offshoring, reshoring, and friend-shoring, creating an overall realignment of global trade between rival blocs. This is expected to reshape supply chains, necessitating adjustments in company relationships and giving rise to new competition.
One of the central challenges facing the global economy in 2024 is of course inflation, with projections indicating a global inflation rate of 5.8%, and core inflation not expected to return to target levels of around 2% until 2025, according to the International Monetary Fund (IMF). However, variations in inflation rates are anticipated across countries and regions based on economic conditions, policy responses, and external shocks.
While the United States experiences relatively low inflation rates, the global average masks substantial differences among countries and regions. Advanced economies are projected to see inflation below 3.0% in 2024 after averaging 4.6% in 2023. In Canada, inflation is expected to continue to decline, staying between 2% and 3%, stabilizing at 2% toward the end of 2024, according to the Business Development Bank of Canada (BDC). Notably, the economic landscape includes a weak Eurozone and a particularly challenged United Kingdom.
Altogether, the realignment of global trade relationships and ongoing inflation challenges are expected to have a significant impact on supply chains, corporate relationships, and competitive dynamics in the coming year and beyond.
3. Cybersecurity risks continue to rise
2023 was a big year for cybersecurity, during which we saw the biggest ever denial of service (DDoS) attack and an increase in cyber attacks with big impacts such as the cyber attack that forced the FAA to ground all flights due to issues with a critical system.
The WEF listed “Widespread cybercrime and cyber insecurity” as the 8th biggest risk in its Global Risks Report 2023.
Forbes lists 12 predictions for cybersecurity in 2024:
- Rise In Ransomware Attacks
- Increased AI-Powered Attacks
- Flipside: AI As A Cybersecurity Tool
- IoT Vulnerabilities
- Electric Vehicle Hack Apocalypse
- Quantum Computing Threats
- Data Velocity And Hybrid Infrastructures
- Need For DevSecOps
- More Zero Trust Adoption
- Stricter Data Privacy Regulations
- Additional Supply Chain Attacks
- Biometric Authentication Challenges
Ramping up cybersecurity action plans and closely monitoring the latest emerging threats will top many companies’ agendas for 2024.
4. Policy impact after COP28’s first ever “Trade Day”
At the COP28 climate summit in October, global leaders marked the first “Trade Day” as part of the UN’s annual climate conference, underscoring the crucial role of trade in combating climate change. Trade is seen as a powerful tool in addressing climate change, influencing global carbon emissions as well as facilitating the flow of green goods and services essential for the low-carbon energy transition.
The global production and distribution of goods and services contribute to roughly a quarter of all carbon dioxide emissions, according to UNCTAD.
During Trade Day’s launch a roadmap of trade policy options were outlined aiming at an equitable and ambitious response to climate change. Discussions throughout the day centered on leveraging trade policies to decarbonize global supply chains, incentivize businesses toward a net-zero future, secure value chains related to the energy transition, and integrate environmentally responsible practices into trade finance.
Emphasis was made on the need for a multi-lateral approach to creating climate and environment regulations so that small businesses and vulnerable countries aren’t entangled in a complex web of rules.
How this multilateral approach to more equitable and environmentally friendly trade policy will come together remains to be seen, and we will be watching for updates throughout 2024.
5. Trade-restrictive measures on the rise
Returning to UNCTAD’s The Global Trade Update, the report highlights a notable rise in trade-restrictive measures in 2023, particularly non-tariff measures (NTMs). This has been attributed to an increase in industrial policies and added pressure for countries to fulfill their climate commitments. As a result, nations are adopting policies that favor domestic industries and aim to decrease dependence on foreign supply chains.
A recent report from UNCTAD, titled “Trade regulations for climate action,” identified 2,366 NTMs related to climate change, impacting 3.5% of potentially tradable goods and representing 26.4% of global trade. For better or worse, UNCTAD has predicted that these policies are likely to reduce the growth of international trade in the year ahead.
6. Friend-shoring planning in 2022 and 2023 is coming to fruition in 2024
The continue swing toward “friend-shoring” for geopolitical closeness and overall risk reduction has led manufacturers to invest billions in building factories that are either closer to the end consumers or in less risky regions.
This trend continues after years of supply chain upheavals caused by a litany of weather, geopolitical and Covid-10 disruptions. The transportation sector is responding by increasing capacity in regions such as cross-border connections between Canada,U.S. and Mexico connecting to Latin America.
“During 2022, 14% of all U.S. imports by value originated in Mexico, according to data analyzed by Supply Chain Dive. Similarly, U.S. firms have long been financially active in the country, and are responsible for 42% of the total foreign direct investment in Mexico since 2006,” according to SupplyChainDive
There has been a general trend of re-organization of shipping routes enacted over the last couple of years that are now starting to operate at full capacity. Logistics companies are racing to fill the demand. Intermodal logistics services out of Mexico have been steadily growing as the CUSMA trade agreement increased demand in the region and became even more attractive within near-shoring and friend-shoring strategies.
UNCTAD also highlights a marked increase in trade concentration. “There has been an overall decrease in the diversification of trade partners, indicating a concentration of global trade within major trade relationships.”
7. Digital trade growth continues, particularly in Africa and Asia Pacific
Digital trade, comprising all digitally ordered or delivered transactions, is reshaping the global economy.
A significant trend in this digital era is the remarkable growth of digitally delivered services, which have nearly quadrupled in value since 2005, passing the growth of goods and other service exports. In 2022, these digitally delivered services made up 54% of total services exports, offering new opportunities for players in the global market, including micro, small, and medium-sized enterprises (MSMEs).
Although developed economies lead in exporting digitally delivered services, developing economies, including those in Africa and Asia Pacific, are increasingly participating in this trend. However, least-developed countries (LDCs) are experiencing slower growth in the export of digitally delivered services.
Governance in digital trade is also growing, and significant progress has been made through bilateral and regional trade agreements. Today most FTAs include digital trade provisions. On top of trade rules, regulations addressing cross-border data flows, consumer protection and issues around competition are being addressed through digital trade policy.
We’ll be watching for developments in the technology, standards and trade policy that come into play in 2024.
8. AI in everything
AI is transforming international trade, along with everything else, at a breakneck pace. This is presenting as many challenges as opportunities to businesses facing cybersecurity risks aided by AI, as well as using AI to find and protect against potential cybersecurity vulnerabilities.
It’s providing a myriad of supply chain technology solutions to improve processes in managing inventory and production, and automating logistics. It is also being used to ease cross-border regulation by automating form filling, checking for documentation errors, and help with compliance checks.
Financial institutions are using AI to assess financial risk and detect potential fraud. Small businesses are benefiting from productivity gains by using AI to generate trade documents, assist with translation, customers service and much more.
As AI is increasingly coming into play in business and in every day life, we will be watching with a particular eye on how it’s being used in trade functions and international businesses.
9. Supply chain volatility is still a huge factor in 2024
At the time of writing, shipping lines are being diverted from routes through the Suez Canal as attacks on cargo ships have recently escalated. At the same time, drought in the Panama Canal region is causing a major bottleneck and disrupting trade flows as shippers look for alternative routes or face delays.
Supply chain disruption has been the name of the game for several years now, with major challenges in capacity amid labour shortages and fluctuating demand during the Covid lockdowns of 2020-2021, geopolitical conflicts and weather-related delays.
While things have now largely stabilized since the pandemic with less congestion and a more normalized supply-demand, new risks such as cyberattacks, continued geopolitical conflicts, and labour shortages and strikes.
Fortunately, there are several tools and new technologies emerging to assist businesses with better plan and risk mitigation including the use of AI tools, digitization of trade and shipping documents, and increased transparency.
10. Gaining new skills most important in getting hired and promoted in 2024
An Employ Recruiter Nation Report shows that 39% of employers plan to focus on internal mobility in 2024. This indicates HR decision-makers’ awareness that in a competitive job market, hiring highly qualified candidates is challenging, necessitating a focus on retaining existing employees.
To do this, there’s a growing trend for organizations to offer career pathing, reducing employee turnover and enabling them to transition into roles that offer challenges and new learning opportunities. This eases the burden on hiring teams, as businesses seek to acquire new skills rapidly through upskilling and internal mobility.
Providing stipends for certifications, mentorship programs, and career development training will be crucial for leaders to empower employees to enhance their skill sets and advance within the organization. While external talent sourcing remains important, prioritizing internal mobility is set to be a major focus in 2024.
At the same time, emphasis will shift from the prestige of past employers on resumes to the importance of individual skills, which also improves diversity, equity, and inclusion. This shift benefits organizations as it broadens the talent pool. Businesses are expected to concentrate on addressing skills gaps which will help achieve the organization’s long-term strategic goals.
The renewed focus on skills is in both technical and leadership competencies, evident in job postings and internal opportunities. Recruiters will continue to prioritize leadership skills, ensuring that the current short-term focus doesn’t lead to leadership skill gaps in the future.
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