Global trade trends and Least Developed Countries' share

In a recent interview with CNBC Africa, Michael Roberts, Head of the Aid for Trade Unit at the WTO, shed light on the global trade trends and the share of Least Developed Countries (LDCs) in it. LDCs, known for being the poorest and most marginalized in terms of global trade, make up just over 1% of the global trade footprint. Despite their small share, there is a clear desire among LDCs to leverage trade as a means to escape poverty and foster economic growth. The outlook for trade in LDCs is crucial for their growth prospects, with projections indicating a positive trend. The global economy is set to see growth rates of 2.6% in 2024, rising to 3.3% by 2025. African LDCs, in particular, are expected to experience growth rates of about 5.4% in 2024, signaling promising prospects. However, various downside risks such as regional conflicts, geopolitical tensions, inflationary pressures, and high interest rates continue to pose challenges for LDCs. With around two-thirds of LDCs teetering on the brink of debt distress, the impact of interest rates on their fiscal space and investment capabilities cannot be understated. In the midst of these challenges, Aid for Trade initiatives play a pivotal role in supporting LDCs' trade agendas and fostering economic development. Roberts emphasized the importance of improving the trade footprint of developing countries, particularly LDCs, as a pathway out of poverty. The Aid for Trade initiative, dating back to 2006, has seen disbursements totaling nearly $650 billion, with a significant portion allocated to LDCs. Despite this financial support, there remains a need to increase funding to further boost LDCs' trade capabilities. The upcoming review at the WTO aims to assess developing countries' aspirations regarding trade and economic growth. Key themes expected to emerge include the importance of using the trade system for continued development and aligning strategies with the concept of re-globalization. Strengthening supply chains and diversifying trade partners are seen as crucial steps towards enhancing resilience and inclusivity in the global trade landscape. Specific focus will be placed on empowering SMEs, which account for over 90% of LDC economies. Additionally, the provision of concessional long-term finance tailored to LDCs' needs is deemed essential, especially in the face of climate change challenges. Vulnerability to climate impacts poses a threat to the progress made by LDCs, making it imperative to integrate climate considerations into trade and development strategies. As discussions unfold at the WTO, the spotlight remains on empowering LDCs, enhancing trade opportunities, and fostering sustainable development in the global trade arena.