The United Nations Conference on Trade and Development (UNCTAD) has announced a notable 6% increase in intra-African trade in 2023, highlighting the positive impact of the Africa Continental Free Trade Area (AfCFTA). Initiated in 2018 and operational from 2021, AfCFTA aims to unify the African continent into a single market for goods and services, facilitating the movement of people to enhance economic integration among its 1.3 billion population across 55 countries, with a combined gross domestic product (GDP) of $3.4 trillion.
According to UNCTAD’s latest Global Trade Update, while the global trade experienced a 3% contraction in 2023, African economies saw an upward trend, contradicting global patterns. This rise in trade between African nations comes at a time when international trade is expected to see a rebound in 2024, following a $1 trillion contraction in global trade values last year, largely due to decreased demand from developed nations and reduced trade activity within East Asia and Latin America.
The report indicates that, despite a global downturn with trade in goods dropping by 5% to $1.3 trillion less than in 2022, the services sector demonstrated resilience by growing $500 billion, or 8%, from the previous year. The final quarter of 2023 marked a stabilization in both merchandise and services trade on a quarter-over-quarter basis.
While trade performance varied between developing and developed countries—with developing countries facing a 4% decrease and developed countries a 6% decrease in trade—trade among developing economies, also known as South-South trade, encountered a sharper 7% decline. However, this trend reversed in the latter part of the year, with developing countries and South-South trade witnessing growth, whereas trade in developed countries remained consistent.
Regionally, African economies outperformed with a 6% increase in trade amongst themselves, in contrast to declines in intra-regional trade within East Asia and Latin America, which fell by 9% and 5%, respectively.
Looking ahead to 2024, UNCTAD is optimistic about the continuation of global trade improvement, driven by moderating inflation, positive economic growth forecasts, and increasing demand for environmental goods, particularly electric vehicles. This positive outlook for trade is anticipated to contribute significantly to the global economy this year.
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