WTO predicts trade growth to slow sharply in 2023 amid multiple crises including Covid and Ukraine war

As the global economy continues to struggle under the impact of multiple shocks, including coronavirus (COVID-19), the Russia-Ukraine war, etc., the World Trade Organisation (WTO) on Wednesday (October 5) revised its trade forecast downwards to one per cent from 3.4 per cent, as forecast in April. Economists have predicted that the global merchandise trade volumes will grow by 3.5 per cent in 2022, which is slightly better than the 3.0 per cent forecast in April.

While presenting a revision of their annual trade forecast, the WTO economists said they still anticipate global economic growth to rise by 2.8 per cent this year, the way it was expected in April.

But they noted that trade across the world is expected to lose momentum in the second half of 2022 and it will remain subdued in 2023 as a result of the global economy being battered by multiple crises. The economists predict a one per cent increase for 2023, down sharply from the previous estimate of 3.4 per cent.

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WTO mentioned that the import demand is expected to soften as growth slows in major economies for different reasons.

The latest report also mentioned that high energy prices caused by the Russia-Ukraine war will squeeze household spending and raise manufacturing costs across Europe.

In the United States, interest-sensitive spending in areas such as housing, motor vehicles, and fixed investment will be hit due to the monetary policy tightening.

Covid outbreaks alongside the production disruptions will continue to impact China as external demand is declining.

WTO chalked out the impact on developing nations as growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress.

Director-General Ngozi Okonjo-Iweala said: "Policymakers are confronted with unenviable choices as they try to find an optimal balance among tackling inflation, maintaining full employment, and advancing important policy goals such as transitioning to clean energy. Trade is a vital tool for enhancing the global supply of goods and services, as well as for lowering the cost of getting to net-zero carbon emissions."

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The new WTO forecast estimates world GDP at market exchange rates will grow by 2.8 per cent in 2022 and 2.3 per cent in 2023 — the latter is 1.0 percentage points lower than what was previously projected.

Meanwhile, the International Monetary Fund forecasts growth of 3.2 per cent this year and 2.9 per cent in 2023.

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