WTO Slashes Forecast for Merchandise Trade Growth in 2023

Date: Wednesday, October 5, 2022
Source: Bloomberg

Global merchandise trade will slow next year as “multiple shocks” ranging from Russia’s war in Ukraine, high energy costs in Europe and US monetary policy tightening raise manufacturing costs and squeeze households, the World Trade Organization said.

The Geneva-based institution said it expects trade growth to fall sharply in 2023 to 1%, compared with its previous forecast of 3.4%, according to a report released Wednesday. The WTO also raised its projection for growth in merchandise trade this year to 3.5%, up from its previous projection of 3%.

The WTO’s forecasts -- which are in line with IMF and OECD projections -- mark a major deceleration from last year’s 9.7% growth in global trade. That was fueled by consumer purchases of household items while travel and other service industries were limited during the depths of the Covid pandemic.

“We’re looking at a situation in which a global slowdown is going to squeeze households even more, squeeze businesses and we may be edging into a recession,” WTO Director-General Ngozi Okonjo-Iweala said in an interview with Bloomberg Television. “It’s looking quite grim -- a little more grim than we had thought.”

In addition to the economic risks facing the US and Europe, the WTO said poor nations stand to suffer, too. “The growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries,” it said.

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