Global merchandise trade growth to slow to 1% in 2023 – WTO

Nurluqman Suratman

06-Oct-2022

SINGAPORE (ICIS)–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, the World Trade Organization (WTO) said late on Wednesday.

The WTO projects global merchandise trade volumes will grow by 3.5% in 2022 — slightly better than the 3.0% forecast in April, it said in a report.

For 2023, however, the WTO expects a 1.0% increase—down sharply from the previous estimate of 3.4% made in April.

The WTO’s trade growth projections were in line with the forecasts made by the World Bank.

Trade growth, while remaining positive in 2023, will slow sharply to just 1.0% — compared with the initial 3.4% forecast, and compared with 3.5% growth projected for 2022, according to the World Bank.

The WTO expects Asia’s total exports to slow down to 1.1% in 2023 from the projected 2.9% growth in 2022.

Asia’s overall imports, however, are expected to increase to 2.2% in 2023 from 0.9% this year.

Merchandise trade volume


Source: WTO

Global import demand is expected to soften as growth slows in major economies.

China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand.

In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs.

In the US, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment.

RISKS TO GROWTH ARE NUMEROUS AND INTERRELATED
“Major central banks are already raising interest rates in a bid to tame inflation but overshooting on tightening could trigger recessions in some countries, which would weigh on imports,” the WTO said.

Escalation of the Russia-Ukraine war could also undermine business and consumer confidence and destabilise the global economy, it said.

“An underappreciated risk would be the decoupling of major economies from global supply chains. This would exacerbate supply shortages in the near term and reduce productivity over the longer term,” the WTO said.

Focus article by Nurluqman Suratman

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