The World Trade Organization (WTO) stated that global trade growth will be “halved” in 2023. Global merchandise trade volume is expected to grow by 0.8% this year, less than half of the April forecast (1.7% growth).
The WTO explained in its latest trade forecast released recently that due to the continued downturn in global trade starting in the fourth quarter of 2022, WTO economists have scaled back their forecasts for global merchandise trade growth in 2023.
Previously, the International Monetary Fund (IMF) estimated that global economic growth is expected to slow until the end of 2024, with its July view slightly more optimistic than its April forecast. The IMF predicts that global real GDP will grow by 3.0% in 2023 and 2024 respectively.
WTO Director General Iweala said: “The expected slowdown in trade in 2023 is worrying because it will have a negative impact on the living standards of people around the world.
A fragmented global economy will only make these challenges more acute, which is why WTO members must seize the opportunity to strengthen the global trade framework by avoiding protectionism and promoting a more resilient and inclusive global economy.
Without a stable, open, predictable, rule-based and fair multilateral trading system, the global economy, especially poor countries, will have difficulty recovering. ”
Global trade growth slows
Georgieva, President of the International Monetary Fund (IMF), recently delivered a speech saying that although the global economy continues to recover from the severe shocks of the past few years, the recovery process is slow and uneven.
The World Trade Organization (WTO) has also recently released its latest trade forecast. The WTO predicts that, based on market exchange rates, global real gross domestic product (GDP) will grow by 2.6% in 2023 and 2.5% in 2024.
Global trade and output suddenly slowed in the fourth quarter of 2022 as the United States, the European Union and other regions felt the impact of persistent inflation and tight monetary policy. These developments, coupled with geopolitical factors, cast a shadow on the trade outlook. .
The WTO expects trade growth this year to be 0.8% and GDP growth to be 2.6%. Next year, trade growth will be 3.3% and GDP growth will be 2.5%. This means that trade growth will be slower than GDP growth this year, but trade growth will be faster than GDP growth next year.
The WTO said the trade slowdown appeared to be broad-based, involving many countries and a variety of goods, particularly certain manufactured goods such as steel, office and telecommunications equipment, textiles and clothing. But one notable exception is passenger cars, whose sales surge in 2023.
At the same time, the WTO also said that the exact cause of the slowdown is not yet clear, but inflation, high interest rates, a rising dollar and geopolitical tensions are all factors contributing to the slowdown.
Trade growth to pick up in 2024
There is some good news in the first half of 2023. Georgieva believes that due to stronger than expected demand in the service industry and tangible progress in fighting inflation, the world economy has shown strong resilience. This increases the possibility of a “soft landing” for the global economy.
But it cannot be taken lightly. Although the global economy continues to recover from the severe shocks of the past few years, the recovery has been slow and uneven. The current pace of global growth is still very slow, far below the 20-year average of 3.8% before the epidemic, and medium-term growth prospects have further weakened.
The IMF believes that the growth momentum in the United States is relatively strong. The United States is the only major economy whose output has returned to pre-pandemic trends. India and several other emerging economies, including Côte d’Ivoire, are the bright spots for growth.
But growth is slowing in most advanced economies. In addition, economic activity in China was weaker than expected and growth was sluggish in many countries.
Therefore, the WTO said the trade slowdown appears to be broad-based, involving many countries and many commodities. It is also predicted that in 2024, along with slow but steady GDP growth, trade growth should pick up.
The growth comes as industries more sensitive to the business cycle should stabilize and rebound as inflation slows and interest rates begin to fall. However, the WTO also warned that signs of supply chain fragmentation are beginning to appear, which may threaten the relatively optimistic outlook for 2024.
Previously, the WTO released the period report “2023 World Trade Report” in September. Some data showed that despite some fragmented characteristics, international trade is still booming throughout 2022, which means that the rhetoric of deglobalization is generally Not supported by data.
“There are tentative signs of a realignment of trade along geopolitical lines,” the report said.
This trend is also evident in foreign direct investment (FDI) flows. “Foreign direct investment, global supply chains and international trade flows are closely linked. Therefore, FDI, along with geopolitical differentiation, may indicate that global trade flows may experience similar trends in the future,” the report warned.
The WTO also warned that if global trade fragments, it may cause a loss of 5% of global GDP. Okonjo-Iweala said: “If not controlled, this trend may eventually lead to the fragmentation of the world economy.” Compared with the impact on other regions, a severe fragmentation of the world will cause the greatest economic losses to the African continent.
Still, the report says talk of “deglobalization” is premature. Data show that in 2022, global merchandise trade volume will increase by 12%, reaching 25.3 trillion US dollars, partly due to…��Caused by global inflation.
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