World Trade Organization’s Forecast for 2023
According to the World Trade Organization (WTO), global merchandise trade volumes are expected to experience a “subpar” growth of 1.7% in 2023. This growth is weighed down by ongoing issues such as the war in Ukraine, high inflation rates, tighter monetary policies, and financial uncertainty. Although this forecast is higher than the WTO’s previous October estimate of 1.0% for 2023, it remains below the 2.6% average growth observed in the 12 years since the global financial crisis.
Factors Affecting Trade Volumes in 2022
Trade volumes faced a downturn in the final quarter of 2022 due to elevated global commodity prices, a tightening of monetary policy in response to inflation, and COVID-19 outbreaks that disrupted production and trade in China. Despite these challenges, goods trade remained resilient throughout most of 2022, with year-on-year trade volume growth averaging 4.3% for the first three quarters. However, the full-year trade growth for 2022 was 2.7%, lower than the WTO’s forecast of 3.5%.
Green Trade Defying the Slowdown
While global trade growth has been slowing down, green goods experienced a 4% trade growth in the second half of 2022. The United Nations Conference on Trade and Development’s (UNCTAD) latest Global Trade Update revealed that trade in environmentally friendly goods reached a record of $1.9 trillion in 2022, an increase of over $100 billion from 2021. Top performers included electric and hybrid vehicles (up 25%), non-plastic packaging (up 20%), and wind turbines (up 10%).
Importance of Multilateral Cooperation on Trade
WTO Director-General Ngozi Okonjo-Iweala emphasized the significance of trade as a force for resilience in the global economy. She also stressed the importance of governments avoiding trade fragmentation and refraining from introducing obstacles to trade. According to Okonjo-Iweala, investing in multilateral cooperation on trade can help bolster economic growth and improve living standards over the long term.
[1] WTO (2023). Global trade growth to slow this year, WTO says, but trade is getting greener. Retrieved from https://www.wto.org/english/res_e/booksp_e/wtsr_2022_e.pdf