Global trade growth to be subpar at 1.7% in 2023: WTO

Several factors contributed to the slump, including elevated global commodity prices, monetary policy tightening in response to inflation, and outbreaks of COVID-19 that disrupted production and trade in China, as per WTO’s ‘Global Trade Outlook and Statistics’ report.

Real global GDP growth at market exchange rates is estimated to be of 2.4 per cent for 2023. Projections for both trade and output growth are below the averages for the past 12 years of 2.6 per cent and 2.7 per cent respectively. The 2.7 per cent increase in world trade volume in 2022 was weaker than the WTO's October forecast of 3.5 per cent.

Notably, trade growth last year turned out to be in line with the 2.4 per cent to 3.0 per cent baseline scenario in the WTO's March 2022 initial report on the war in Ukraine, and well above its more pessimistic scenario in which trade would have grown just 0.5 per cent as countries started to split into competing economic blocs.

The 1.7 per cent forecast for trade growth in 2023, meanwhile, is up from the previous estimate of 1.0 per cent from last October. A key factor here is the relaxation of COVID-19 pandemic controls in China, which is expected to unleash pent-up consumer demand in the country, in turn boosting international trade.

Looking ahead to 2024, trade growth should rebound to 3.2 per cent, as GDP picks up to 2.6 per cent, but this estimate is more uncertain than usual due to the presence of substantial downside risks, including geopolitical tensions and the possibility of unforeseen fallout from monetary tightening.

“Trade continues to be a force for resilience in the global economy, but it will remain under pressure from external factors in 2023.This makes it even more important for governments to avoid trade fragmentation and refrain from introducing obstacles to trade. Investing in multilateral cooperation on trade, as WTO members did at our Twelfth Ministerial Conference last June, would bolster economic growth and people's living standards over the long term,” said WTO director-general Ngozi Okonjo-Iweala.

Fibre2Fashion News Desk (DP)