MercoPress. South Atlantic News Agency

WTO cuts 2023 global trade growth by half to 0,8%; forecasts a great 3,3% leap in 2024

The trade slowdown appears broad-based, involving many countries and a wide range of products,” says the WTO in its report.

The World Trade Organization (WTO) expects international trade to grow by 0.8% this year, down from the 1.7% estimated in April. In its updated forecasts released this week, the organization justifies the downgrade with an inflationary environment, rising interest rates in the United States and the European Union, as well as tension in the Chinese real estate market.

The aftershocks of the COVID-19 crisis have also hindered the consolidation of economic recovery in China. “Together with the consequences of the war in Ukraine, these developments have cast a shadow on trade prospects. The trade slowdown appears broad-based, involving many countries and a wide range of products,” says the WTO in its report.

According to the WTO, affected products include iron and steel, telecommunications, office equipment, textiles, and clothing. The organization notes, “A notable exception is passenger vehicles, which saw a surge in sales in 2023.”

In the first half of this year, international merchandise trade was 0.5% lower than the same period last year, but a recovery is expected by the end of the year. A strong recovery is projected for 2024, with a growth rate of 3.3%.

“Trade growth should resume next year, accompanied by a steady rise in GDP. Sectors more sensitive to economic cycles are expected to stabilize and recover as inflation moderates and interest rates fall,” says the WTO.

Estimates indicate global GDP growth of 2.6% this year, up from the 2.4% projected in April and 2.5% in 2024, a slight revision from the previous estimate of 2.6%.

However, the World Trade Organization also highlights that “signs of supply chain fragmentation are beginning to emerge, which could threaten the relatively optimistic outlook for 2024.”

Ngozi Okonjo-Iweala, the institution’s Director-General, says that “the projected trade slowdown in 2023 is a cause for concern due to the adverse implications for people’s livelihoods around the world. Global economic fragmentation would only make these challenges more difficult.”

Therefore, she adds, “WTO members must seize the opportunity to strengthen the architecture of global trade, avoiding protectionism and promoting a more resilient and inclusive global economy. The global economy, impoverished countries, will struggle to recover without a stable, open, predictable, rules-based, and fair multilateral trading system.”

The Chief Economist of the organization, Ralph Ossa, while acknowledging “some signs in the data of trade fragmentation related to geopolitical tensions,” rules out, for now, a “more comprehensive deglobalization.”