UNCTAD predicts a dip in trade volumes, and other international trade stories to know this month

The global economy is moving from an initial phase of supply disruptions and inflation into a "more fragile period, where prolonged uncertainty could trigger shortages and wider financial stress", according to UN Trade and Development (UNCTAD).

In its newly released Trade and Development Foresights 2026 report, the intergovernmental body warns that geopolitical risks have definitively replaced trade policy disputes as the dominant source of instability for the global economy.

Driven by transport disruptions, market volatility, and a spike in shipping costs following the late-February military escalation in the Middle East, UNCTAD projects a broad deceleration in both global economic growth and merchandise trade volumes for the year.

The report highlights that while nominal merchandise trade values remained resilient through early 2026, the underlying momentum is unevenly distributed and exposed to logistical shocks:

Looking ahead, UNCTAD sees a more uneven global economy, with structurally slower growth, tighter financial conditions and continued vulnerability in developing economies to trade, energy and financing shocks - reinforcing the case for greater policy coordination and stability.

While multilateral trade frameworks face mounting strain, US President Donald Trump and Chinese President Xi Jinping used their 14-15 May summit in Beijing to pledge continued dialogue around deeper economic ties, with Trump later hailing the talks as “very successful”.

Meanwhile, Xi set out what he called a “new positioning” for ties between the two countries, built around a “constructive, strategically stable” relationship that combines areas of cooperation with ongoing differences.

Independent analysts, however, were more measured in their assessments, noting that the summit produced no explicit extension of the trade truce and that several of the headline commercial commitments fell short of pre-summit expectations

Moreover, rather than a broad rollback of systemic tariffs, the state visit focused on establishing commercial guardrails to stabilize volatile global supply lines. US Treasury Secretary Scott Bessent later clarified to Reuters that the US is "not in a rush" to extend the existing trade ceasefire, expecting Beijing to accept the ultimate restoration of prior Section 301 tariffs.

According to official state comms and international news sources, key outcomes include:

This initial stabilization is expected to be followed by further high-level meetings, including a planned reciprocal visit by President Xi to Washington in September. However, Bessent described China's current compliance on critical minerals as "satisfactory, but not excellent," marking a key checkpoint before the trade truce officially expires in November.

The UK has agreed to a trade deal with six Gulf states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – the first between a G7 country and the Gulf Co-operation Council. The government expects the deal to remove around $779 million a year in tariffs on UK exports and make trade easier between the UK and the Gulf region, according to the BBC. The deal is projected to add £3.7 billion a year to the UK economy. Key UK exports set to benefit include food and drink products, as well as manufactured goods, medical supplies and technology. The deal follows earlier UK trade agreements with India and South Korea, and existing agreements with the US and the EU.

Meanwhile, the European Union (EU) has cleared a key hurdle towards implementing its trade pact with the US, CNBC reports, after EU lawmakers reached a provisional agreement on legislation to remove import duties on American goods. The agreement includes safeguard mechanisms allowing the bloc to suspend tariff reductions if US imports threaten European industry. It also allows Brussels to withdraw tariff preferences if US duties on EU steel and aluminium derivatives remain above 15% beyond 2026.

The Wall Street Journal reports that "oil is likely to trade meaningfully lower later this year" should the current crisis, as Julius Bauer predicts, follow the typical pattern of a "short, sharp price shock". Traffic through the Strait of Hormuz is recovering, easing supply pressures, even though flows remain well below pre-conflict levels. And the global economy is also holding up, the Journal says, helped by resumed trade, lower logistics and refining mark-ups, and easing fuel prices outside the US.

Russia and China said they will assess risks and ensure safety as they seek to expand Russian meat exports to China, according to a joint statement following talks between Vladimir Putin and Xi Jinping in Beijing. The statement comes after recent disease outbreaks in Siberia raised concerns over cattle health and export controls, and no agricultural deals were signed during the visit.

The EU-Mercosur Interim Trade Agreement began provisional application on 1 May, marking a milestone in one of the longest-running trade negotiations in modern history, after more than 25 years of intermittent talks. The deal creates a trading zone of around 700 million people across the EU and Argentina, Brazil, Paraguay and Uruguay, with immediate tariff cuts on a range of products. Provisional application proceeds despite a European Parliament referral to the Court of Justice of the EU questioning the agreement's legal structure. Full entry into force still requires ratification by all 27 member states, a process not expected before 2027.

Can AfCFTA deliver on its promise of deeper integration and stronger intra-African trade? A new World Economic Forum white paper says the agreement has strong potential to boost value chains and regional commerce, but stresses that outcomes will depend on implementation. AfCFTA Implementation: Learnings from Value Chains and Regional Blocs highlights lessons from regional blocs and a private-sector case study showing that progress hinges on reducing friction at borders, along transport corridors and within domestic regulatory systems.

The EU’s Industrial Accelerator Act marks a major shift towards domestic manufacturing, but success will ultimately depend on secure, affordable energy and large-scale infrastructure investment needed to support industrial expansion, explains Ayla Majid, Founder and Chief Executive Officer of Planetive. Read more on how Europe’s industrial future hinges on energy security, infrastructure modernization and massive investment.