Global Trade Suffers Setback as Exports from Emerging Markets Slump
- Demand Drops Sharply in Asia and Africa, While Latin America Shows Resilience
Global trade flows weakened further in January 2025, with seasonally adjusted merchandise exports declining by 1.8 percent month-on-month, according to the latest data published by the International Monetary Fund (IMF). This follows a 0.3 per cent dip in December 2024 and signals a troubling start to the year for global trade amid rising protectionism and flagging demand in key markets.
The downturn was driven almost entirely by Emerging Market and Developing Economies (EMDEs), where exports fell by 3.8 per cent month-on-month. Advanced Economies (AEs) recorded a more modest decline of 1.5 percent, contributing just -0.2 percentage points to the overall contraction, highlighting the asymmetric impact of current global economic headwinds.
Asia, Africa, and Europe Lead Export Decline
The steepest declines were observed in Emerging and Developing Asia, where exports fell a staggering 6.2 per cent, underscoring the challenges faced by the region’s manufacturing-heavy economies as consumer demand weakens in major markets like China and the United States. Emerging Europe and the Middle East and Central Asia also recorded notable drops of -3.0 per cent and -2.2 per cent, respectively, while Sub-Saharan Africa saw subdued export activity, although the exact figure was not specified in the release.
“This contraction is reflective of a broader softening in industrial production, tightening global financial conditions, and elevated geopolitical tensions,” said an economist who is familiar with the IMF reports.
Latin America Defies Global Trend
In contrast to the broader gloom, Latin America and the Caribbean posted an unexpected 4.2 percent increase in merchandise exports. The region benefited from stronger commodity prices and a seasonal boost in agricultural shipments, according to preliminary analysis by trade economists.
“Latin America’s export resilience may be short-lived, however, if the global slowdown drags into the second quarter,” warned another IMF contributor.
Year-on-Year Picture: Broad-Based Contraction
On an annual basis, global exports were 2.0 percent lower in January 2025 than a year earlier. EMDEs saw a 2.9 percent drop, while exports from AEs declined 1.5 percent, reflecting both cyclical downturns and structural shifts in global supply chains.
The IMF’s dataset, compiled from a sample of 109 economies reporting to the World Trade Organization and the International Financial Statistics (IFS), represents one of the most comprehensive monthly snapshots of international trade performance.
Implications for Ghana and Sub-Saharan Africa
Though not detailed numerically, the weakness in Sub-Saharan Africa’s exports suggests that commodity-exporting economies like Ghana may face tighter fiscal conditions, declining foreign exchange reserves, and deeper current account imbalances if the trend persists. The Bank of Ghana and Ministry of Trade may be compelled to reassess trade policy strategies amid volatile external demand.
As Ghana eyes regional trade opportunities through AfCFTA and targets non-traditional exports, this global backdrop raises critical questions about resilience-building and export diversification.
