WTO predicts global trade slowdown in 2023

Global trade growth is expected to slow to 1.7% in 2023 after increasing by 2.7% in 2022, according to forecasts released this Wednesday by the World Trade Organization (WTO).

“Risks affecting the outlook point to a downside given geopolitical tensions, food insecurity, potential financial instability resulting from monetary tightening and rising debt,” the WTO forecast.

WTO economists now expect merchandise trade to grow by 1.7% in 2023 from an estimate of 1% in October, but a slowdown from a 2.7% increase in 2022.

The WTO said an important improvement factor is the loosening of controls related to the Covid-19 pandemic in China, which should boost demand and stimulate international trade.

WTO economists point to real growth in gross domestic product (GDP) of 2.4%.

“Trade continues to be the engine of global economic resilience, but it will continue to be under external pressure in 2023,” WTO Director-General Ngozi Okonjo-Iweala said in a statement accompanying the release of the forecasts.

Ngozi Okonjo-Iweala argued that governments should avoid creating trade barriers.

The 2.7% increase in world trade in 2022 was weaker than the WTO forecast of 3.5% in October, which is associated with a fall recorded in the fourth quarter of last year.

Several factors contributed to this retreat, including rising global commodity prices, tightening monetary policy in response to inflation, and waves of Covid-19 affecting manufacturing and trade in China, according to the WTO.

In 2024, trade growth is expected to recover to 3.2% and GDP growth to 2.6%, a forecast marked by “greater than usual uncertainty” due to significant downside risks, including rising geopolitical tensions, global food tension. insecurity, the possibility of unanticipated side effects of monetary tightening, risks affecting financial stability and rising debt levels.