Macroeconomic outlook

World trade to slow down in 2023

The World Trade Organisation (WTO) published on 5 April its new World Trade Outlook and Statistics report. Photo: Shutterstock

The World Trade Organisation (WTO) published on 5 April its new World Trade Outlook and Statistics report. Photo: Shutterstock

Despite a series of shocks--Russia’s war in Ukraine and supply chain disruption--world merchandise trade remains resilient, growing by 2.7% in 2022 according to the WTO. But in 2023, its growth and that of GDP will be lower than the averages of the last 12 years.

According to the latest data contained in the World Trade Outlook and Statistics report, the volume of world merchandise trade is expected to grow by 1.7% in 2023 after increasing by 2.7% in 2022. This decline is due to the war in Ukraine, persistent high inflation, commodity prices, current monetary tightening policies and uncertainties in financial markets.

Last October, the WTO predicted that trade would grow by only 1% by 2023. A key factor in this improvement is the relaxation of controls related to the covid pandemic in China, which should release pent-up consumer demand in the country and thus boost international trade, the WTO said.

When trade suffers...

And when trade suffers, growth suffers even more: the WTO puts global real GDP growth at market exchange rates at an estimated 2.4% for 2023. This is lower than the averages for the last 12 years, which stand at 2.6% and 2.7% respectively.

For Ngozi Okonjo-Iweala, the WTO director general: “Trade continues to be an engine of resilience in the global economy, but it will remain under pressure from external factors in 2023. It is all the more important that governments avoid trade fragmentation and refrain from creating barriers to trade. Engaging in multilateral cooperation on trade, as WTO members did at the 12th Ministerial Conference last June, would stimulate economic growth and raise people's living standards in the long run.” A series of agreements were signed on this occasion, covering fisheries subsidies, the lifting of patents on vaccines against viruses, the fight against food insecurity and the extension of the moratorium on electronic transactions.

Likely rebound in 2024

For 2024, the WTO forecasts a rebound in both merchandise trade and world GDP at 2.6% and 3.2% respectively. “However, this estimate is tinged with greater-than-usual uncertainty due to the existence of significant downside risks, including geopolitical tensions, food supply shocks and the possibility of unintended consequences of monetary policy tightening,” the WTO said.

The full WTO report is available here.

This story was first published in French on Paperjam. It has been translated and edited for Delano.