In 2023, international trade saw one of its weakest performances in four decades — which has been thought to be a temporary situation driven by both the compositional changes, the mix of goods and services traded, related to COVID-19 recovery and macroeconomic pressures such as inflation and high interest rates. While a more positive outlook is anticipated for 2024 and 2025, with trade expected to realign with global output growth, significant challenges remain from economic uncertainties, geopolitical tensions, and transportation disruptions.

This report leverages detailed and high-frequency data to offer a timely, in-depth monitoring of the evolving trade landscape and the factors underlying recent changes amidst the ongoing disruptions to international trade. Examining both short-term and structural trends during 2023 and the first half of 2024, the analysis found that:

• Services trade performed relatively well in 2023, driven by the recovery of travel-related services which were impacted more heavily by the pandemic travel restrictions in 2020-22. The product composition of goods and services trade has been shifting back towards the pre-pandemic structure. However, relatively large differences remain even now, particularly for services.

• After the phase out of the People’s Republic of China’s (hereafter, China) COVID-19-related restrictions, the country’s trade and output grew faster than those for the OECD area and the world in 2023 and at the beginning of 2024 and this supported world trade growth. China’s trade in 2023 also saw notable changes in the partner and product structure which may be an indication of a more structural re-orientation of its trade. The decline in China’s import growth since the beginning of 2024 may be an indication of the country’s economic slowdown which could have significant negative implications for global trade and the world economy.

• The Russian Federation’s (hereafter, Russia) goods trade balance declined significantly in 2023 due to a high base effect from soaring energy prices following its invasion of Ukraine in 2022 as well as the effects of far-reaching trade and other economic sanctions.

• Russia’s war on Ukraine and associated sanctions have altered global trade patterns with Russia redirecting exports to China and India while importing less from the European Union and other sanctioning OECD countries. G7 imports from Russia have declined in both volume and value terms except for products where Russia is an important exporter such as cereals, fertiliser, metals, and inorganic chemicals. G7 exports to Russia of strategic products such as machinery, vehicles and aircrafts have also decreased.

• Commodity prices continued to decline in 2023, albeit also from historically high levels reached following the COVID-19 pandemic and Russia’s invasion of Ukraine and remained higher than pre-pandemic levels at the start of 2024 despite subdued global GDP growth the previous year.

• The on-going transportation disruptions in the Suez and Panama Canals — respectively the nineth and the seventeenth most globally important maritime chokepoints, accounting together for 19% of global maritime trade in 2023 — highlight the importance of understanding the relationships between trade and transportation including routes, chokepoints, and shipping costs.

• Maritime transport accounts for the bulk of internationally traded goods and is a particularly important mode of transport for energy-related and agricultural products which account for most of the non-containerised maritime traffic in the Suez and Panama Canals.

• The rerouting of ships from the Suez Canal is causing longer transit times, shipping delays and increased costs, on maritime routes crossing the Suez Canal, such as those connecting Asia and Europe, as well as on routes to and from the US East Coast due to the interconnectedness of maritime routes—which are already experiencing an additional upward pressure from drought-related restrictions in the Panama Canal.

• Adjustments have been taking place and, so far, the impacts have been relatively limited, illustrating a degree of resilience of global trade to maritime transport disruptions. The analysis also shows a range of effects which, if magnified or spread to other transport routes or chokepoints, may have more significant implications for global trade, prices, and economic growth in the future.

• Against the background of recent announcements of further tariff increases by the United States, the European Union and Canada on electric vehicles (EVs) imported from China, this note explores the evolution of world trade concentration of electric vehicles and EV batteries. This analysis shows a significant increase in the concentration of global trade of EVs and EV-related parts, in particular batteries, mainly accounted for by the emergence of China as a new and fast expanding producer. China’s growing market dominance has given rise to concerns about trade dependency and resilience in an industry that is seen as crucial to the green energy transition.