(Geneva) World trade growth is expected to slow this year, dampened by the war in Ukraine, inflation, tighter monetary policies and financial uncertainty, according to WTO projections released on Wednesday.
The outlook for the global economy has improved slightly since the World Trade Organization’s most recent trade forecast was released in October, but the pace of trade expansion in 2023 is expected to be “weak”.
WTO economists now forecast merchandise trade volume growth of 1.7% in 2023 – up from the 1.0% estimate made in October, after growing 2.7% in 2022.
According to the WTO, a key factor in this improvement is the easing of controls related to the COVID-19 pandemic in China, which should release the accumulated consumer demand in the country and thus stimulate international trade.
WTO economists also expect real GDP growth of 2.4%.
Trade and output growth rates are thus expected to be below their respective averages of 2.6% and 2.7% recorded in the 12-year period following the collapse of trade caused by the global financial crisis. , also notes the WTO.
“Trade continues to be a driver of resilience in the global economy, but will remain under pressure from external factors in 2023,” WTO Director-General Ngozi Okonjo-Iweala said in an accompanying statement. publication of forecasts.
“It is all the more important that governments avoid trade fragmentation and refrain from creating barriers to trade,” she continues.
The 2.7% increase in world trade volume in 2022 was lower than the 3.5% rate forecast in October by the WTO, due to the fall observed in the fourth quarter of the last year.
Several factors have, according to the WTO, contributed to this fall, including the rise in world commodity prices, the tightening of monetary policy in response to inflation and the outbreaks of COVID-19 which have disrupted production. and trade in China.
According to WTO Chief Economist Ralph Ossa, “The lingering effects of COVID-19 and growing geopolitical tensions are the main factors affecting trade and production in 2022 and are likely to continue. will still be like this in 2023.”
In the statement, he also noted that “interest rate hikes in advanced economies have also revealed weaknesses in banking systems that could lead to broader financial instability if left unaddressed.”
It calls on governments and regulators to be particularly “attentive to these financial risks” in the coming months.
After years of expansionary monetary policy, central banks find themselves in a difficult situation in which they must find “a balance” allowing them to contain inflation while supporting economic growth and maintaining financial stability, says the WTO , which warns: “An error in calculation could have negative consequences on the world economy and trade”.
Before adding: “Nobody ever said that it would be easy to reverse low interest rates and we are likely to go through areas of turbulence”.
In 2024, trade growth is expected to rebound to 3.2% and GDP growth to 2.6%.
But this estimate is “tainted with greater than usual uncertainty”, notes the WTO, due to the existence of significant downside risks, including growing geopolitical tensions, global food insecurity, possibility of unforeseen repercussions from tighter monetary policy, risks affecting financial stability and rising debt levels.