WTO: World trade will grow just 1% in 2023

The World Trade Organization (WTO) forecasts that the volume of world trade will grow by a scant 1% next year, with markets weighed down by crises and challenges, including high fuel prices, rising interest rates, uncertainty about Chinese production and the persistence of the COVID-19 pandemic.

The Geneva-based organization said on Wednesday that the amount of goods moved between countries is expected to rise 3.5% this year, compared with 3% it anticipated in its first forecast for the year in April.

In 2023 a growth of 1% is forecast, compared to the previous forecast of 3.4%. “Without a doubt, the risks point to a downturn” next year, WTO Director-General Ngozi Okonjo-Iweala told a news conference at the organization’s headquarters.

This year, the higher-than-expected rise in trade volumes is due to mid-year data, allowing for a clearer forecast and a strong rise in volumes from Middle Eastern oil and gas producing countries as that consuming countries were turning their backs on Russia and looking for alternative sources, according to WTO economists.

The WTO included among the factors that hinder trade the increase in energy prices caused by the Russian war in Ukraine, which led several countries, including members of the European Union that are large consumers of Russian oil and natural gas , to apply economic sanctions to Moscow.

“Today, the global economy is facing a multipronged crisis,” Okonjo-Iweala said. “Monetary tightening weighs on growth in many parts of the world, including the United States. In Europe, high energy prices squeeze homes and businesses. Additionally, in China, COVID-19 outbreaks continue to disrupt production and daily economic life.”

“Low-income developing countries face serious food security risks and debt distress,” he added.

While global trade has rebounded from a deep slump in the early days of the pandemic, moves by the US Federal Reserve and other central banks to tackle inflation through high interest rates will likely hit spending on crucial items like housing, vehicle sales and bond prices, according to the WTO.

The WTO, one of several multilateral organizations that forecast fluctuations in economic output, says it expects global gross domestic product to rise 2.8% this year and 2.3% next. In April it had forecast growth of 3.2%.

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