WTO cuts global merchandise trade growth forecast to 0.8%, cites broad-based slowdown

  • WTO expects real world GDP to grow by 2.6 percent at market exchange rates in 2023 and by 2.5 percent in 2024.

Livemint
Updated5 Oct 2023, 10:21 PM IST
In April, WTO had projected a trade growth of 1.7 percent in 2023. Photographer: Adeel Halim/Bloomberg
In April, WTO had projected a trade growth of 1.7 percent in 2023. Photographer: Adeel Halim/Bloomberg

The World Trade Organisation (WTO) has scaled down global merchandise trade growth forecast to 0.8 percent, as it pointed towards the broad-based slowdown. The projection is less than half the 1.7 percent increase forecasted in April, as per a release issued on October 5.

The international trade body cited the inflation prevailing in the United States and Europe, the sluggish economic recovery in China and the continuing Russia-Ukraine war while projecting a grim forecast for this calendar year.

“These developments have cast a shadow over the outlook for trade. The trade slowdown appears to be broad-based, involving a large number of countries and a wide array of goods,” the WTO said in a release.

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However, the Geneva-based institution said its 3.3 percent growth projection for 2024 remains nearly unchanged from the previous estimate.

WTO furthermore expects real world GDP to grow by 2.6 percent at market exchange rates in 2023 and by 2.5 percent in 2024.

Trade growth should pick up next year accompanied by “slow but stable GDP growth”, it said. Sectors that are more sensitive to business cycles should stabilise and rebound as inflation moderates and interest rates start to come down, it added, but also noted that “signs are starting to emerge of supply chain fragmentation, which could threaten the relatively positive outlook for 2024”. 

For example, the share of intermediate goods in world trade, an indicator of global supply chain activity, fell to 48.5 percent in the first half of 2023, compared to an average of 51.0 percent over the previous three years, it said.

“The projected slowdown in trade for 2023 is cause for concern, because of the adverse implications for the living standards of people around the world,” WTO Director-General Ngozi Okonjo-Iweala said. “Global economic fragmentation would only make these challenges worse.”

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First Published:5 Oct 2023, 10:21 PM IST
Business NewsNewsWTO cuts global merchandise trade growth forecast to 0.8%, cites broad-based slowdown

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