Home / Economy / WTO warns of sharp decline in global trade next year

NEW DELHI :  

The World Trade Organization (WTO) on Wednesday sharply lowered its projection for global merchandise trade volume growth next year to barely 1% against 3.4% estimated earlier, citing the Russia-Ukraine war, rising food prices and tightening monetary policy.

India’s exports has dipped for the first time in 19 months, led by a decline in shipments of engineering goods and apparel -- both labour-intensive sectors.

However, WTO economists now expect trade to grow at 3.5% in 2022 from the 3% forecast in April.

“The picture for 2023 has darkened considerably. Policymakers are confronted with unenviable choices as they try to find an optimal balance between tackling inflation, maintaining full employment, and advancing essential policy goals such as transitioning to clean energy.," WTO director-general Ngozi Okonjo-Iweala said.

Trade is a vital tool for enhancing the global supply of goods and services, as well as for lowering the cost of getting to net-zero carbon emissions," she added.

WTO also lowered world GDP estimates for 2023 to 2.3% from the 3.3% estimated earlier as it expects trade and output to be weighed down by several shocks, including the war in Ukraine, high energy prices, inflation, and monetary tightening.

Moreover, the trade body predicted a decline in demand in India’s top export destinations.

In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs, while in the US, monetary policy tightening will hit interest-sensitive spending.

“China continues to grapple with covid-19 outbreaks and production disruptions paired with weak external demand," it added.

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