Home / News / World /  World Trade Organization cuts global trade forecast for 2023 to 1%

The growth in world trade is expected to slow down to 1 percent in 2023, down sharply from the previous estimate of 3.4 percent, due to global uncertainties, World Trade Organization (WTO) has said in its forecast.

“World trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023 as multiple shocks weigh on the global economy," it in its press release.

WTO has also projected a growth of 3.5 per cent in global trade this year, as against the April estimate of 3 per cent.

World trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023, as multiple shocks weigh on the global economy, the multi-lateral body has said in a statement.

Also Read: Services PMI hits six-month low in September

"WTO economists now predict global merchandise trade volumes will grow by 3.5 per cent in 2022 -- slightly better than the 3 per cent forecast in April. For 2023, however, they foresee a 1 per cent increase -- down sharply from the previous estimate of 3.4 per cent," it said.

WTO forecast further estimates world GDP at market exchange rates will grow by 2.8 percent in 2022 and 2.3 percent in 2023 — the latter is 1.0 percentage points lower than what was previously projected.

The forecast does not augur well for India as it is looking to increase its exports.

A decline in exports in sectors such as engineering, ready-made garments of all textiles and rice led to a contraction in the country's overall outbound shipments by 3.52 per cent to USD 32.62 billion in September, while the trade deficit widened to USD 26.72 billion, according to the preliminary data released by the commerce ministry.

According to WTO, import demand is expected to soften as growth slows in major economies for different reasons.

In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs, it said.

It further added that in the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment.

China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand.

Finally, growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries, it said.

"Policymakers are confronted with unenviable choices as they try to find an optimal balance among tackling inflation, maintaining full employment, and advancing important policy goals such as transitioning to clean energy. 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," Director-General Ngozi Okonjo-Iweala said.

It added that if the current forecast is realized, trade growth will slow sharply but remain positive in 2023.

It should be noted that there is a high degree of uncertainty associated with the forecast due to shifting monetary policy in advanced economies and the unpredictable nature of the Russia-Ukraine war, the WTO said. 

(With inputs from PTI)

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