Global trade growth will be sharply lower than forecast this year as stubborn inflation, high interest rates and the war in Ukraine pressure economies around the globe, the World Trade Organization has said.
Strains in China’s vast property market also prompted the WTO to cut its trade growth forecast to just 0.8 percent this year, less than half the increase it had previously projected.
“The projected slowdown in trade for 2023 is cause for concern, because of the adverse implications for the living standards of people around the world,”said the WTO director-general, Ngozi Okonjo-Iweala.
“The 3.3 percent growth projected for 2024 remains nearly unchanged from the previous estimate” of 3.2 percent, it said.
The WTO expects real world GDP to increase by 2.6 percent at market exchange rates this year, and by 2.5 percent in 2024.
“A continued slump in goods trade that began in the fourth quarter of 2022 has led WTO economists to scale back their trade projections for the current year while maintaining a more positive outlook for 2024,” the Geneva-based organisation said.
“Positive export and import volume growth should resume in 2024, but we must remain vigilant,” said WTO chief economist Ralph Ossa.
Sectors that are more sensitive to business cycles are expected to stabilise and rebound as inflation moderates and interest rates start to fall.
The slowdown in merchandise trade growth appears to be broad-based, covering a large number of countries and a wide range of goods, though some sectors are more strongly affected, such as iron, steel, office and telecom equipment, textiles and clothing, the WTO said.
“The exact causes of the slowdown are not clear, but inflation, high interest rates, U.S. dollar appreciation, and geopolitical tensions are all contributing elements,” the trade body said.