The latest WTO projections, released on Wednesday, indicate that world trade growth will decelerate this year. This can be attributed to various factors such as the ongoing war in Ukraine, inflation, tighter monetary policies, and financial uncertainty.
The World Trade Organization's most recent trade forecast, released in October, predicted weak trade expansion in 2023 for the global economy. However, WTO economists have revised their forecast, anticipating merchandise trade volume growth of 1.7% in 2023, up from the 1.0% estimate made in October, following a rise of 2.7% in 2022. This improvement is attributed to the relaxation of Covid-19 controls in China, which should stimulate international trade by releasing accumulated consumer demand. However, the outlook remains under pressure from external factors such as the lingering effects of Covid-19 and geopolitical tensions.
WTO Director-General Ngozi Okonjo-Iweala has urged governments to avoid a "fragmentation of trade" and not to create "barriers to trade". While trade continues to drive the resilience of the global economy, it will remain under pressure from various factors in 2023. The WTO warns of significant downside risks, including growing geopolitical tensions, global food insecurity, unforeseen repercussions from tighter monetary policy, risks affecting financial stability, and rising debt levels.
In 2024, trade growth is expected to rebound to 3.2%, and GDP growth to 2.6%. However, this estimate is "tinged with greater than usual uncertainty," says the WTO. Central banks face the challenge of finding a balance between containing inflation, supporting economic growth, and maintaining financial stability after years of expansionary monetary policy. A miscalculation could have negative consequences on the world economy and trad