Global trade to grow 0.8% this year; 3.3% projected for 2024.
In a notable shift, the World Trade Organization (WTO) has adjusted its trade projections, reflecting a somber outlook for 2023 while maintaining optimism for the following year. A sustained decline in goods trade, which commenced in the last quarter of 2022, prompted WTO economists to revise their forecasts. The multilateral trade body said in its Global Trade Outlook and Statistics Update: October 2023.
The latest assessment anticipates a modest 0.8% growth in global merchandise trade for the current year, down from the previous estimate of 1.7% in April. However, the outlook for 2024 remains relatively stable, with a projection of 3.3% growth—almost unchanged from prior estimates.
This adjustment underscores the ongoing challenges and uncertainties affecting international trade, including geopolitical tensions, economic slowdowns, and supply chain disruptions. While the WTO maintains a more positive perspective for 2024, it highlights the need for concerted efforts to navigate the current complex global trade landscape and foster a more robust economic recovery.
Ngozi Okonjo-Iweala, the Director-General of the WTO, expressed deep concern over the anticipated trade deceleration, emphasizing its potential to adversely impact the livelihoods of people worldwide, especially those in emerging economies.
Reasons:
The report elaborates that some reasons for this meek projection are:
Global trade and economic growth took a sharp hit in the fourth quarter of 2022 due to tighter monetary policies in the United States, the European Union, and other regions.
While there was initial hope for a rapid recovery with falling energy prices and the easing of pandemic restrictions in China, these expectations have not been met. Challenges in China’s property markets and persistent inflation in the U.S. and the EU have hindered a strong rebound.
Additionally, the aftermath of the Ukraine conflict and the ongoing impact of the COVID-19 pandemic have cast a shadow over trade prospects in 2023 and 2024.
This trade slowdown is widespread, affecting numerous countries and a range of goods, particularly in categories like iron and steel, office and telecom equipment, textiles, and clothing. However, passenger vehicle sales have bucked the trend, experiencing significant growth in 2023.
While the exact causes of the slowdown remain unclear, factors such as inflation, high interest rates, U.S. dollar appreciation, and geopolitical tensions are all contributing factors.
