UNCTAD’s latest Global Trade Update suggests cautious optimism amid structural concerns - Trade Treasury Payments

After nearly two years of subdued performance, global trade is growing again. 

According to UNCTAD’s Global Trade Update released this week, the value of world merchandise trade expanded by approximately $250 billion in Q1 2025, continuing a modest upward trajectory that began in late 2023.

UNCTAD notes that trade in goods increased by 1.5% quarter-on-quarter, while services trade rose slightly faster at 2.8%, supported by strong tourism and digitally delivered services.

However, the lion’s share of growth was concentrated in developed economies, with US imports up 14% and EU exports rising 6% in early 2025. Developing countries, meanwhile, saw mixed results, with South-South trade remaining 5% below its 2022 levels.

From a sectoral perspective, growth was most prominent in pharmaceuticals, semiconductors, and renewable energy equipment, while clothing, furniture, and some low-tech manufactured goods posted declines.

The momentum in Q1 may not persist through the year unless policymakers address a series of structural and geopolitical risks.

Digital consolidation and the platform economy

Beyond headline trade values, the Global Trade Update dedicates significant attention to digital markets, where UNCTAD sees growing concentration and systemic implications for competition and development.

As of 2025, seven of the world’s ten most valuable firms operate primarily in digital markets, (spanning cloud services, e-commerce, advertising, and increasingly, generative AI). The top five digital firms now account for 48% of global digital platform revenues, more than double their share from 2017.

Much of this acceleration is being credited to the diffusion of AI technologies, which UNCTAD identifies as a new pillar of competitive advantage. Strategic alliances between large tech firms and AI developers are reinforcing existing market dominance, raising concerns about barriers to entry and innovation lock-in.

The approaches that governments are taking towards policy also varies. Since 2020, the number of competition-related interventions targeting digital markets has quadrupled, with the most activity in the EU, US, and parts of Asia. However, Africa and Latin America lag, facing resource constraints and limited enforcement capacity.

For trade policymakers, this presents the dual challenge of regulating platform dominance while ensuring that digital trade remains open and inclusive, especially for SMEs and emerging market firms.

Looking ahead: soft landing or slow unravelling?

UNCTAD’s forward outlook is cautious. While global trade is likely to continue expanding in the short term, the report flags several risks that could weigh on performance in H2 2025 and beyond.

Chief among these are geopolitical tensions, financial instability, and an environment of persistent policy uncertainty. Fragmentation in supply chains (whether due to nearshoring, friend-shoring, or outright decoupling) continues to reshape trade flows, and the implications that this will have in the long-term still remain unclear.

The report also warns that exchange rate volatility and fluctuations in commodity prices could introduce renewed instability low- and middle-income countries that are reliant on primary exports and external financing.

Yet, amid these concerns, there are signs of adaptation. Some developing countries are making gains in digital service exports, and the adoption of AI-enabled productivity tools in trade logistics and customs is expanding. Moreover, multilateral efforts (including discussions on e-commerce, trade facilitation, and competition frameworks) are gaining traction, albeit slowly.

Trade recovery underway, but not guaranteed

The UNCTAD Global Trade Update suggests that global trade has returned to growth, but its trajectory is uncertain. 

For industry participants, there are two main implications. On the one hand, opportunities exist, especially in sectors aligned with digital transformation, energy transition, and value-added services. On the other, risks are rising, especially in the context of sensitive technologies (think, policy fragmentation and rising protectionism).

For  deeper insights, regional breakdowns, and sector-level detail you can access the full report from the UNCTAD website.