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Coleman Nee is senior economist at the Economic Research and Statistics Division of the World Trade Organization (WTO), where he has worked since 2004. Kamal Dev Bhattarai of ApEx spoke with him about global trade, problems faced by LDCs, and how geopolitics is affecting global trade.

How do you see the prospects of global trade in 2024?

We expect a gradual rebound in global trade volume for goods throughout 2024 and 2025, following a decline in 2023 primarily due to the persistent impact of elevated energy costs and inflation in developed economies, notably in Europe. Specifically, we project a 2.6 percent increase in merchandise trade for 2024 and a further 3.3 percent growth in 2025, following a 1.2 percent dip in 2023. Nevertheless, the presence of various downside risks has contributed to the uncertainty inherent in all economic predictions, particularly those concerning trade. These risks encompass regional conflicts, geopolitical tensions, and uncertainty in economic policies.

It seems we are making progress towards global trade recovery, what are the reasons behind it?

Inflation diminished real household earnings and reduced net earnings of businesses in 2023, leading to a decline in the demand for manufactured goods, which play a significant role in global trade. Conversely, as inflationary pressures diminish and policy interest rates eventually decrease, this should have a contrasting effect this year and the following, progressively boosting consumption and increasing the demand for imports.

What are the downside risks?

Geopolitical tensions and policy uncertainty could limit the scope of any trade rebound. While export growth should improve in many economies as external demand for goods picks up, food and energy prices could again be subject to price spikes linked to geopolitical events. Choosing an appropriate pace of interest rate cuts will also be challenging for central banks in advanced economies, and any miscalculation could lead to financial volatility later in 2024. The resilience of global trade is also being tested by disruptions on two of the world’s main shipping routes: the Panama Canal and the Suez Canal. 

The Panama Canal handles six percent of global trade, with over 70 percent of traffic destined for or originating from the United States. It is currently operating at partial capacity due to freshwater shortages, with restrictions likely to remain in place for some time. Meanwhile, the Suez Canal handles about 12 percent of global trade, and roughly one-third of container shipping between Asia and Europe. The diversion of traffic away from the Red Sea and around the Cape of Good Hope has added around 10 days to Asia-Europe journeys while boosting fuel costs.

Overall, risks are tilted to the downside, although there is some upside potential if trade in the European Union recovers faster than expected.

How does geopolitics affect global trade?

The global economy has been hit by several economic shocks in recent years while geopolitical tensions have been rising. In response to these and other concerns, some governments have become more skeptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations. These actions have had some impact on trade patterns, but evidence of a sustained trend toward deglobalization remains scant. One early sign of changing trade patterns is bilateral trade between the United States and China. Despite a record high in 2022, total bilateral trade between the world’s two largest economies grew 30 percent more slowly since 2018 than their trade with the rest of the world. 

In services, there are early indications also as data from the United States appear for example to show evidence of recent ‘friendshoring’ in information and communication technology (ICT) services. US imports of ICT services by region from 2018 to 2023. During this period, US imports from North American trading partners (mostly Canada) increased from 15.7 percent of total ICT imports to 23 percent. At the same time, US imports from Asian trading partners (mostly India) fell from 45.1 percent to 32.6 percent. 

Regarding the regional aspects, what are the prospects of growth in Asia?

In 2023, weak demand reduced export volumes in Europe and prevented a stronger recovery in Asia, while the picture in other regions was mixed. If the WTO’s trade forecast for 2024 is realized, Asia will contribute more to merchandise trade growth than it did over the last two years. The region is expected to add around 1.3 percent points to the projected 2.9 percent growth in world exports this year, or around 45. On the imports side it should add 1.9 percentage points to the anticipated 2.3 percent growth in world imports, or around 81 percent. Asia’s exports will grow 3.4 percent in 2024 and 3.4 percent in 2025. Asia’s imports meanwhile will grow 5.6 percent in 2024 and 4.7 percent in 2025. 

What are the key problems faced by LDCs countries in the global trade?

The impact of the 2023 trade slump on least developed countries (LDCs) is a matter of concern since these countries have limited resources to deal with global economic shocks. The drop in merchandise exports of LDCs last year was in line with the decline at the world level, but the contraction on the import side was larger, limiting consumption possibilities for LDCs. Merchandise exports of LDCs fell from $269bn in 2022 to $256bn in 2023, corresponding to an annual percentage change of -4.6 percent. This was roughly equal to the decline at the world level, leaving the share of LDCs in world exports stable at 1.1 percent. Meanwhile, merchandise imports of LDCs fell from $355bn in 2022 to $316bn in 2023. The -11 percent decline was roughly twice as large as the decline in world imports. As a result, the share of LDCs in world imports fell from 1.4 percent in 2022 to 1.3 percent in 2023.

LDC oil exporters recorded large merchandise trade surpluses in both 2022 ($24bn) and 2023 ($14bn). Other groups of LDCs experienced trade deficits last year, ranging from $36bn for countries that mostly export agricultural products to $4bn for ones that primarily export non-fuel minerals. According to preliminary WTO estimates for 2023, the US dollar value of LDC exports of fuels and mining products fell 16.5 percent in 2023. Their exports of agricultural products were also down 8.7 percent while shipments of manufactured goods dropped 12.6 percent. Exports of other products (including non-monetary gold) increased by four percent. These developments in value were influenced by corresponding price changes (for example, an eight percent rise in gold prices) as well as trade volume developments.

The Indian Embassy in Kathmandu gifted 35 ambulances and 66 school buses to various organizations, spread across different districts of Nepal, and working in the field of health and education respectively on Sunday.

Indian Ambassador to Nepal Shri Naveen Srivastava handed over the keys of vehicles in the presence of Finance Minister Barsha Man Pun.

Mayors and chairpersons of municipalities and rural municipalities of various districts as well as representatives of various beneficiary organizations, political representatives, officials of the Government of Nepal, and social workers were also present at the event, reads a statement issued by the Indian Embassy in Kathmandu today.

The representatives of the Embassy handed over the two out of the total 101 vehicles gifted today to the earthquake-affected Jajarkot and West Rukum districts.

The Government of India has been giving ambulances and school buses on the occasion of the Independence Day and the Republic Day of India for 3 decades to various beneficiary organizations in different parts of Nepal, giving high priority to Nepal's health and education sectors.

On the occasion, the Ambassador stated that this has been one of the long-standing initiatives of the Government of India under the Nepal-India Development Partnership to bolster the efforts of the Government of Nepal to strengthen its infrastructure in health and education sectors.

Ambassador further highlighted that this is a part of the robust and strong development partnership between India and Nepal and has a geographical spread throughout Nepal, touching people's lives and bringing out tangible progress in the development journey of Nepal, according to the statement.

 Finance Minister Pun, during the program, appreciated Government of India’s various ongoing developmental projects in Nepal and expressed that these will continue to strengthen people-to-people connectivity and bilateral relations between the two countries.  He emphasized that this flagship program is very beneficial for the people of Nepal.  

Since 1994, the Government of India has gifted 1,009 ambulances and 300 school buses across Nepal, including those gifted today. It is part of Government of India’s continued support for the efforts of Nepal to strengthen its health and education facilities and to facilitate easy physical access to these services.

Speaker of the House of Representatives (HoR) Devraj Ghimire has said that the third session of the Parliament was comparatively more successful than the previous sessions.

In the meeting held Sunday in the context of prorogue of the third session, he said that the third session was comparatively more successful than the previous session in terms of law making and voicing issues of public concern among others.

Speaker Ghimire said, "Compared to the previous session, the third session was successful, but it was not adequately long enough. I am confident that the next session will be more effective and result-oriented based on high understanding and prudent decisions between political parties."

He expressed his gratitude to the members who participated actively throughout the sessions and expressed his gratitude to all the mechanisms including security and the staff of the Federal Parliament Secretariat who assisted in the parliamentary business.

"Parliament is the main place where people's feelings are expressed by representatives elected by the people, people's hopes and expectations are expressed here as well as dissatisfaction and anger," he said,

The speaker said that if the voices expressed in the Parliament can be addressed and brought to a conclusion at the right time, the importance and time of this dignified institution could be properly utilized. He opined that the more active and enlightened parliament ensures qualitative impact on law making process.

On that occasion, he expressed his best wishes for the New Year 2081 BS.

The Kathmandu Valley Traffic Police Office has launched the 'Traffic Awareness Special Campaign-2081' beginning today. The campaign aims to develop a civilized road culture through the promotion of traffic awareness.

Inaugurating the Campaign today, Deputy Prime Minister and Minister for Home Affairs, Rabi Lamichhane, announced coming up with a special operation aimed at making public transport more reliable and safer. He said that amendments to policies, rules, and acts needed for promoting road safety will be carried out. 

According to him, the Ministry is focused on improving public transport to make it widely accessible, reliable, and convenient.     

Expressing his concerns over the negligence in compliance with traffic rules, he advised the traffic police to maintain politeness in verbal treatment but to act toughly against the violation of traffic rules.

The Home Minister warned that the government will be responding to the culture of traffic rule violation toughly and this will be to save lives. But before, switching to that policy, some time will be given for unlearning this culture by organizing an awareness program. He also took time to express his concern over what he argued growing politicization in each sector.

He said that the government is thinking about coming up with a provision for awarding those who will report to the traffic police cases of violation of traffic rules.

"The government is focused on promoting a technology-friendly traffic management system," he added.

Seeking the report prepared by the road security task force in the past, he said the government is committed to improvements aiming to promote road safety.

Stating that there should be additional standards in the license issuing process, he said a road trial is necessary before granting a driving license.  

"Any area reporting cases of accidents due to negligence on the part of traffic police, an in-charge in the given area will get fewer marks during an official evaluation and the career development procedures," according to the Home Minister.

Deputy Mayor of Kathmandu Metropolitan City Sunita Dangol said that this campaign is very significant, as the traffic awareness program makes everyone responsible. She emphasized on improving the behavior of the traffic police. Deputy Chief Dangol pointed out the need for citizens to use the roads responsibly.

Mentioning that some policy reforms are necessary, she said that it is necessary to make citizens aware.

Chief of Kathmandu Valley Police Office, Additional Inspector General of Police Deepak Thapa said that the work has started with special attention on traffic management and public transport management in the valley.

He stated that if CC cameras can be installed in the transport, it will be easier to stop abuse and informed that the matter has been discussed with the Sajha Yatayat.

President of the Federation of Nepalese National Transport Entrepreneurs Association, Bijay Bahadur Swanr, said that everyone should work together to reduce accidents. Stressing on increasing public awareness, he urged immediate implementation of the report of the Public Transport Improvement Task Force.

He expressed his belief that 80 percent of public transport will improve only if the report is implemented.

An expert on road safety, Bhagwati Sedhai, said that by raising awareness in the community, 20 percent of accidents will be reduced. He suggested recruiting traffic volunteers and said that citizens should also be sensitive. He also urged people to change their thinking that following the rules of the road is only for the police.

Chief of the Kathmandu Valley Traffic Police Office (KVTPO), Deputy Inspector General of Police Poshraj Pokharel said the campaign has been launched with the objective of raising awareness of and making the general public and the organizations responsible in following the traffic rules.

Stating that humanitarian traffic management is a challenge, he said the traffic management of Kathmandu will be somewhat easier if the infrastructure could be improved, vehicles parking well-managed and corridors are opened.

A traffic awareness rally was held in Kathmandu prior to this.

The winter session of the federal Parliament will be prorogued from midnight today.

During a meeting of the House of Representatives on Sunday morning, Speaker Devraj Ghimire announced that the winter session will be prorogued from today midnight.

On the recommendation of the Cabinet meeting, President Ram Chandra Paudel had sent a letter to the Parliament Secretariat regarding the end of the session.

In this period, only three bills were endorsed from both the houses.

Local residents celebrated the famous Sindhoor Jatra in the premises of Balkumari Temple, Madhyapur Thimi on Sunday.

This festival is celebrated every year on Baishakh 1 and 2 as part of Biska Jatra observed by people of the Newar community in Bhaktapur district.

The festival marks the arrival of spring.

On the occasion, devotees gather at one place and take out a procession carrying 32 palanquins carrying idols of various deities.

People smear Sindhoor (orange vermillion powder) to each other while taking out the procession.

The price of gold has dropped by Rs 2, 200 per tola in the domestic market on Sunday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 136, 800 per tola today. It was traded at Rs 139, 000 per tola on Friday.

Similarly, tejabi gold is being traded at Rs 136, 150 per tola. It was traded at Rs 138, 350 per tola.

Meanwhile, the price of silver has dropped by Rs 50 and is being traded at Rs 1,700 per tola today.

Nepali Congress has objected to the government’s decision to prorogue the winter session of the Federal Parliament.

A meeting of the Parliamentary Party held on Sunday morning concluded that the government has been ignoring the demand of the main opposition to form a parliamentary probe committee to investigate the alleged involvement of Deputy Prime Minister and Minister for Home Affairs Rabi Lamichhane in the cooperative fraud.

Congress Chief Whip Ramesh Lekhak mentioned that the government has been turning a blind to the demand of the party.

“There should be a serious and meaningful dialogue on the demand of the Nepali Congress to form a parliamentary probe committee to investigate charges against Deputy Prime Minister and Home Minister Ravi Lamichhane. But the government has been moving ahead against the parliamentary norms and values,” he said, adding, “The government should be serious on the people’s demand. The parliamentary practice cannot be undermined.”

He said that the Congress has not obstructed the Parliament, instead the House is being obstructed due to the irresponsibility of the government.

Congress has strongly condemned the government's decision to end the winter session.

Leader Lekhak said that the government has unexpectedly prorogued the winter session of the federal Parliament.