WTO halves 2023 global trade growth forecast; Ukraine’s legal disputes with EU nations ‘on hold’

The World Trade Organization (WTO) halved its growth forecast for global goods trade for this year, on Thursday (Oct 5) citing persistent inflation, higher interest rates, the Ukraine war and a strained Chinese property market. Meanwhile, Kyiv said that its legal disputes with European Union member nations at the United Nations agency trade body were “on hold”.

WTO’s global trade growth forecast

WTO has given a number of factors which have cast a shadow over its outlook. According to the Geneva-based trade body, merchandise trade volumes would increase by just 0.8 per cent in 2023 which is less than half of its 1.7 per cent estimate back in April.

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However, the 164-member trade body, for 2024 estimates that the goods trade growth would pick up to 3.3 per cent which is just 0.1 per cent higher than its previous estimate in April.

The WTO also expects the real-world GDP to increase by 2.6 per cent at market exchange rates this year and 2.5 per cent in 2024.

According to the WTO, the trade slowdown was broad-based and involved a larger number of countries and goods – particularly iron and steel; office and telecoms equipment; textiles and clothing. While cars were a notable exception witnessing a rise in sales this year.

The UN trade body also reiterated its warning that they have observed some trade fragmentation linked to global tensions but did not see any evidence of a broader de-globalisation that could threaten its forecast for the next year.

“The data suggest that goods continue to be produced through complex supply chains, but that the extent of these chains may have reached their high-water mark,” said the WTO. The UN trade body also said that it was immediately clear if the recent decline was due to geopolitical tensions or the general economic slowdown.

“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 WTO director-general, Ngozi Okonjo-Iweala, adding that global economic fragmentation would only make these challenges worse.

Ukraine’s legal dispute at WTO

Kyiv said its lawsuits filed against its neighbouring EU members – Poland, Slovakia and Hungary – over their bans on Ukrainian grain is “on hold”.

This comes after the war-torn country’s trade representative Taras Kachka, as per news agency Interfax Ukraine said, “We see that this problem will be eliminated in the coming weeks and months.”

The Ukrainian official also clarified that they are “not in a dispute” since they have not “formalised a working body to conduct a dispute,” adding that it is important to find a “constructive solution within the whole EU”.

Poland since welcomed Ukraine’s move and said that pausing of a complaint before the WTO is a “a necessary step”.

Polish government spokesman Piotr Muller told the PAP agency, “We look forward to further constructive actions by Ukraine to develop a suitable relationship on agricultural issues.”

(With inputs from agencies)

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