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Global trade growth in 2023 "halved"! The latest WTO forecast......
Oct 10,2023
The World Trade Organization (WTO) has said that the growth of global trade in 2023 will be cut in half ",Global merchandise trade is expected to grow by 0.8 per cent this year, less than half the 1.7 per cent growth forecast in April.
In its latest trade forecasts released recently, the WTO explained that due to the continued downturn in global trade starting in the fourth quarter of 2022, WTO economists' forecasts for global merchandise trade growth in 2023 have been reduced.
Earlier, the International Monetary Fund (IMF) estimated that global economic growth is expected to slow to the end of 2024, and its July view was slightly more optimistic than its April forecast. The IMF expects global real GDP to grow by 3.0 per cent in 2023 and 2024, respectively.
WTO Director-General Ivera said: "The expected slowdown in trade in 2023 is worrying because it will adversely affect the living standards of people around the world.
A fragmented global economy will only make these challenges more severe, which is why WTO members must seize the opportunity to strengthen the global trading framework by avoiding protectionism and promoting a more resilient and inclusive global economy.
Without a stable, open, predictable, rule-based and equitable multilateral trading system, the global economy, especially poor countries, will struggle to recover."
Global trade growth slows
International Monetary Fund (IMF) President Georgieva said in a speech a few days ago that although the global economy has continued to recover from the severe shocks of the past few years, the recovery process is slow and uneven.
The World Trade Organization (WTO) also recently released its latest trade forecast. The WTO predicts that at market exchange rates, global real gross domestic product (GDP) will grow by 2.6 in 2023 and 2.5 in 2024.
The sudden slowdown in global trade and output in the fourth quarter of 2022 was due to the impact of sustained inflation and tight monetary policy felt in the United States, the European Union and elsewhere, and these developments overshadowed the trade outlook by geopolitical factors.
The WTO expects trade to grow by 0.8 percent this year and GDP by 2.6 percent, and next year by 3.3 percent and GDP by 2.5 percent. This means that this year's trade growth will be slower than GDP growth, but next year's trade growth will be faster than GDP growth.
The WTO said the 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 surged 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, the appreciation of the US dollar and geopolitical tensions are all factors contributing to the slowdown.
Trade growth to pick up in 2024
There was some good news in the first half of 2023. Georgieva believes that the world economy has shown strong resilience due to stronger-than-expected demand for services and real progress in fighting inflation. This raises the possibility of a "soft landing" for the global economy.
But not to be taken lightly. While the global economy has continued to recover from the severe shocks of the past few years, the process of recovery has been slow and uneven.The current pace of global growth remains very slow, well below the 3.8 per cent average in the 20 years prior to the epidemic, and the medium-term growth outlook has weakened further.
The IMF believes that the growth momentum of the United States is relatively strong. The United States is the only major economy whose output has returned to pre-epidemic trends. India and several other emerging economies (including Cote d'Ivoire) were the bright spots for growth.
But growth is slowing in most advanced economies. In addition, economic activity in China has been weaker than expected and growth in many countries has been sluggish.
As a result, the WTO said, the trade slowdown appears to be broad-based, involving a wide range of countries and commodities. It predicts that trade growth should pick up in 2024, along with slow but steady GDP growth.
The growth is due to the fact that sectors that are more sensitive to the business cycle should stabilize and rebound as inflation eases and interest rates begin to fall.However, the WTO also warned that signs of supply chain divergence are beginning to appear, which may threaten the relatively optimistic outlook for 2024.
Previously, the WTO reported the 2023 World Trade Report during its September release. Some data showed that despite some fragmentation characteristics, international trade is still booming throughout 2022, which means that the speech of de-globalization 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, the geopolitical polarization of FDI may indicate a similar trend in global trade flows in the future." The report warns.
The WTO also warned that a split in global trade could result in a loss of 5 percent of global GDP. "If left unchecked, this trend could eventually lead to a fragmentation of the world economy," Mr Okonjo-Iweala said." The severe fragmentation of the world would cause the greatest economic damage to the African continent compared to the impact on other regions.
Still, the report says it's too early to talk about "de-globalization.Data show that in 2022, the global trade volume of goods will increase by 12% to 25.3 trillion US dollars,This is partly due to global inflation.
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