World trade growth is expected to slow to 1.7% in 2023 after rising 2.7% in 2022, the World Trade Organization (WTO) said on Wednesday. “In 2023, world trade growth is expected to remain weak, despite a slight improvement in GDP projections made last fall,” notes the WTO in its new report entitled “World Trade Outlook and Statistics”.
Driven by the war in Ukraine, stubbornly high inflation, tighter monetary policy and financial market uncertainty, world merchandise trade volume is expected to grow by 1.7% this year, says the WTO.
However, the 1.7% growth forecast for trade in 2023 is higher than the 1% estimate made last October. A key factor in the improvement is the easing of controls related to the Covid-19 pandemic in China, which is expected to release accumulated consumer demand in the country and thus boost international trade, according to the WTO.
“Trade continues to be a driver of the resilience of the global economy, but it will remain under pressure from external factors in 2023. It is all the more important that governments avoid a fragmentation of trade and refrain from to create barriers to trade,” said WTO Director-General Ngozi Okonjo-Iweala, quoted in the report.
And to continue: “Engaging in multilateral trade cooperation, as WTO members did at the 12th Ministerial Conference last June, would stimulate economic growth and raise the living standards of the people of long term “. Last year, trade growth was finally in line with the baseline scenario discussed in the WTO’s initial report on the war in Ukraine published in March 2022, which forecast a range between 2.4% and 3%, and well above the 0.5% projected in the most pessimistic scenario in which countries would have started to separate into competing economic blocs.
Complementary WTO research published last month showed how vulnerable economies could compensate for the war-induced cut in essential food supplies by turning to other products and suppliers.