WTO halves 2023 goods trade growth forecast to 0.8%

The World Trade Organization (WTO) on Thursday more than halved its global goods trade forecast for 2023 to 0.8%, from 1.7% estimated in April, amid a global manufacturing slowdown.

The trade slowdown appears to be broad based, involving a large number of countries and a wide array of goods amid a continued slump that began in the fourth quarter of
2022, the multilateral trade body said in its Global Trade Outlook and Statistics Update: October 2023.


“The exact causes of the slowdown are not clear, but inflation, high interest rates, US dollar appreciation, and geopolitical tensions are all contributing elements,” the WTO said.

However, the 3.3% growth projected for 2024 remains nearly unchanged from the previous estimate of 3.2%.

WTO Director-General Ngozi Okonjo-Iweala said the expected slowdown of trade was a cause for concern because it could depress the living standards of people around the world, particularly in poor countries.

Iron and steel, office and telecoms equipment, textiles and clothing contributed to the slowdown while automative products were an exception where sales have risen.

Falling commodity prices and appreciation of the dollar have pushed world merchandise trade down 5% on-year in the first half of 2023, according to the report.

Risks, growth
The WTO said risks to its forecast were balanced. A sharper than expected slowdown in China and resurgent inflation in advanced economies would require keeping interest rates higher for a longer period.

“The data suggest that goods continue to be produced through complex supply chains, but that the extent of these chains may have reached their high-water mark," the WTO said.

As per the report, Asia’s export growth is
expected to turn positive in the second half of the year while Europe’s is expected to flip into negative territory.

Import volume growth is expected to turn positive in Asia and North America in the second half of 2023 whereas Europe’s imports could remain weak.

The organisation’s forecast does not cover services, but it said that growth was moderating after a strong rebound in international tourism in 2022. Global commercial services trade rose 9% in the first quarter of 2023, down from 19% in the second quarter of 2022, the WTO said.