WTO Predicts Global Trade Growth Slowdown for Rest of 2022, 2023
The World Trade Organization expects global trade growth to "lose momentum" in the second half of the year and remain tepid in 2023 given multiple shocks to the world economy, the WTO said. Global merchandise trade is now predicted to grow by 3.5% in 2022, but to improve by only 1% in 2023, down from an earlier estimate of 3.4%, the trade body said. The WTO expects import demand to slow given high energy prices stemming from Russia's war in Ukraine and tightening monetary policy in the U.S. that will impact interest-sensitive spending in industries such as housing. Further, China's COVID-19 policy and production disruptions coupled with weak external demand along with "growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries," the WTO said.
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The organization said that world GDP at market exchange rates will likely increase by 2.8% in 2022 and 2.3% in 2023 -- a dip from the expected 3.2%. Given this expected dip, the Middle East is expected to have the largest trade volume growth of any region in 2022, with exports predicted to jump 14.6% and imports 11.1%. Elsewhere in its predictions, the WTO said that the value of merchandise trade in U.S. dollars rose 17% year-on-year in the second quarter of 2022 and that energy prices soared 78% year-on-year in August while food prices jumped 11%, grain prices went up 15% and fertilizer prices rose 60%.
"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," 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."