GENEVA - Global trade is set to contract by 5% in 2023 compared to last year, the United Nations trade body said on Monday, with an overall pessimistic forecast for 2024.

In its Global Trade Update, the United Nations Conference on Trade and Development (UNCTAD) projected that commerce this year would amount to approximately $30.7 trillion.

Trade in goods is expected to contract by nearly $2 trillion in 2023, or 8%, but services trade should increase by about $500 billion, or 7%, according to the U.N. body.

UNCTAD attributed this contraction in global trade in part to an underperformance of exports from developing countries.

"Global trade has experienced a decline throughout 2023, primarily influenced by diminished demand in developed nations, underperformance in East Asia economies, and a decrease in commodity prices," UNCTAD said.

"These factors collectively contributed to a notable contraction in the trade of goods."

UNCTAD said the forecast for global trade in 2024 remained "highly uncertain and generally pessimistic."

"While certain economic indicators hint at potential improvements, persistent geopolitical tensions, high levels of debt, and widespread economic fragility are anticipated to exert negative influences on global trade patterns," it said.

(Reporting by Gabrielle Tétrault-Farber; Editing by Andrew Cawthorne)