Why is it in the news?
- Global Trade Outlook and Statistics Report was released by World Trade Organisation.
More about the news
- Preliminary signs of fragmentation in trade flows identified in the Global Trade Outlook and Statistics Report by the World Trade Organisation.
Fragmentation in goods trade:
- In 2023, intermediate goods trade decreased by 6%, while trade in non-intermediates remained flat.
- The share of Asian trading partners in China’s total parts and accessories declined slightly from 62.8% in 2019 to 60.2%.
- Disruptions on major shipping routes, including the Panama Canal and Suez Canal, are testing the resilience of global trade.
- Panama Canal, handling 6% of global trade, is operating at partial capacity due to freshwater shortages.
- Suez Canal, responsible for about 12% of global trade, faces trade hindrances due to vessel attacks, leading to diversions of traffic and longer Asia-Europe journeys.
Fragmentation in services trade:
- Potential impact of data flow disruptions noted.
- Evidence of “friendshoring” observed in ICT services, with US imports from Asia (mainly India) dropping to 32.6% from 45.1%, while imports from North America increased.
| · “Friendshoring” refers to a trade practice where a country’s supply chain networks are focused on political and economic allies.
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| Initiatives to boost global supply chain and trade · Supply Chain Resilience Initiative (SCRI) launched by India, Japan, and Australia. · India-Middle East-Europe Economic Corridor aimed at connecting India to the Gulf and Gulf to Europe. · Indo-Pacific Economic Framework for Prosperity (IPEF) established to enhance economic engagement among partner countries.
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