WTO Predicts Slowdown In Global Trade Volume Growth In 2023

The World Trade Organisation (WTO) has predicted a sharp reduction in global trade volume growth. Tweeting about this change, WTO brought down the forecasts to 1 per cent from the initial 3.4 per cent, citing several reasons. 

The latest predictions from the Geneva-based organisation come at a time when the global economy has been battling with predictions of several shock waves. Weighing in on some of these, WTO while predicted a slowdown on global trade volume growth, expects a slight increase in global merchandise trade volumes. It is estimated that this may grow by 3.5 per cent in 2022, which will be better than the previous estimates of 3 per cent in April.

WTO said, “World trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023 as multiple shocks weigh on the global economy.”

Explaining its predictions, WTO mentioned that these patterns are expected in the coming days due to the most burning issues like increasing energy prices, rising interest rates and even higher bills for food and fertilizers. These rising costs are expected to affect import demand in a negative way, also indicating that several major economies may witness a ‘slow growth’ period. 

Elaborating on its estimates, the Geneva-based WTO mentioned that the adverse effects are expected to be seen in the United States (US) due to an expected monetary policy tightening. As far as China goes, this slowdown is expected due to the continued COVID-19 battle and disruptions in production. 

However, the Middle East is expected to have the strongest trade volume growth of any region in 2022 on both the export side (14.6 per cent) and the import side (11.1 per cent), the WTO said. 

According to the official WTO report, 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.”

In addition to an expected slowdown, the latest WTO numbers also estimate world GDP at market exchange rates growing by 2.8 per cent in 2022 and 2.3 per cent in 2023. However, the latter is also 1.0 percentage points lower than the previous predictions. 

While the predictions have been released at a time that the world is economy is expecting a recession, WTO’s report also mentions: “It should be noted that there is a high degree of uncertainty associated with the forecast due to shifting monetary policy in advanced economies and the unpredictable nature of the Russia-Ukraine war.”