World trade growth to slow to 1.7% in 2023

World trade growth is expected to slow to 1.7% in 2023 after rising 2.7% in 2022, the World Trade Organization (WTO) said Wednesday.

“In 2023, world trade growth is expected to remain weak, despite a slight improvement in the GDP projections made last fall,” the WTO said in its new report entitled “World Trade Prospects and Statistics”.

As a result of the war in Ukraine, stubbornly high inflation, tighter monetary policy and uncertainty in financial markets, the volume of world merchandise trade is expected to grow by 1.7 percent this year, the WTO said.

However, the 1.7% growth forecast for trade in 2023 is higher than the 1% estimate made last October. A key factor in this improvement is the relaxation of controls related to the Covid-19 pandemic in China, which is expected to release pent-up consumer demand in the country and thus boost international trade, according to the WTO.

“Trade continues to be a driver of resilience in the global economy, but it will remain under pressure from external factors in 2023. It is all the more important that governments avoid trade fragmentation and refrain from creating barriers to trade,” WTO Director-General Ngozi Okonjo-Iweala was quoted in the report as saying.

Engaging in multilateral trade cooperation, as WTO members did at the 12th Ministerial Conference last June, would boost economic growth and raise people’s living standards over the long term,” she added.

Last year’s trade growth was finally in line with the baseline scenario outlined in the WTO’s initial report on the war in Ukraine released in March 2022, which projected a range of 2.4 to 3 per cent, and well above the 0.5 per cent projected in the worst-case scenario in which countries would have begun to separate into competing economic blocs.

A complementary WTO study released last month showed how vulnerable economies could compensate for the war-induced cut-off of essential food supplies by turning to other products and suppliers.