WTO predicts sharp discount in world commerce in 2023
The World Trade Organization (WTO) sharply lowered its forecast for world trade growth for 2023 on Wednesday, in an economy globally affected by multiple shocks, such as the war in Ukraine and currency restrictions.
“The outlook for 2023 has degraded considerably,” WTO Director-General Ngozi Okonjo-Iweala said in presenting the forecasts to the press.
“The world economy faces multiple crises. Rising interest rates weigh on growth in much of the world,” she added.
WTO economists expect world goods trade volume to grow by 3.5% in 2022 – slightly higher than the 3.0% increase forecast in April, but project a 1.0% increase for 2023 – number far below the previous estimate of 3.4% published in April.
According to the new WTO forecasts, world GDP is expected to grow by 2.8% in 2022 and 2.3% in 2023 (1.0 percentage point less than the previous forecast for the latter figure).
By comparison, the OECD, which kept its forecast at 3% for 2022, recently announced that it expects growth of 2.2% next year.
The IMF, in turn, expects growth of 3.2% this year and 2.9% in 2023.
If the institution’s current forecasts are confirmed, trade growth will slow dramatically in 2023, but will remain positive.
However, the WTO notes that there is “great uncertainty about forecasts due to the change in monetary policy in advanced economies and the unpredictable nature of the war launched by Russia in Ukraine,” according to WTO economist Coleman Nee.
Added to this are the “challenges that monetary and budgetary policies face”, he says.
In 2023, if downside risks materialize, trade growth could be negative (-2.8%), but if there is good news, it could reach 4.6%, according to the WTO.
Last week, Okonjo-Iweala said the world was heading for a “global recession”.
“Political leaders face difficult dilemmas in finding an ideal balance between fighting inflation, keeping jobs and achieving important goals such as the clean energy transition,” he said on Wednesday.
However, “a reduction in supply chains would only exacerbate inflationary pressures, leading to a slowdown in economic growth and a reduction in living standards in the long term,” he warned.
Demand for imports will fall around the world as a result of slowing growth, which in turn is caused by a number of factors in major economies.
In Europe, the rise in energy prices as a result of the war in Ukraine will cause a compression of household spending and an increase in costs in the manufacturing sector, details the WTO.
In the United States, the tightening of monetary policy will have repercussions on interest-rate-sensitive spending, such as the housing, auto and fixed-stock investment sectors.
China continues to face new Covid-19 outbreaks and production disruptions associated with weak external demand, the WTO continues.
In short, the increase in the import bill for fuel, food and fertilizers could generate food insecurity and an increase in debt in developing countries.
The WTO also points out that an excessive tightening of monetary policy can cause recession in some countries.