The World Trade Organization has revised its outlook for global goods trade, indicating a slight increase in growth for this year. The Geneva-based organization now projects a 2.7% rise in global goods trade in 2023, up from the 2.6% forecasted earlier in April. Looking ahead to 2024, the WTO anticipates a growth rate of 3%, slightly lower than the previous forecast of 3.3%. In 2022, world merchandise trade volume experienced a decline of 1.1%, primarily due to high inflation and rising interest rates.
Despite the upward revision in the trade outlook, the WTO has highlighted significant risks to its forecast. Geopolitical tensions and economic policy uncertainties are cited as key factors that could potentially impact global trade dynamics. The organization emphasized that these factors pose substantial downside risks to the projected growth trajectory.
On a positive note, the WTO reported a 2.3% year-on-year increase in global merchandise trade during the first half of 2023. Additionally, a decline in inflation levels by mid-year has enabled central banks to initiate interest rate cuts, signaling a favorable economic environment for trade.
WTO Director-General Ngozi Okonjo-Iweala expressed cautious optimism about the future, foreseeing a gradual recovery in global trade for 2024. However, she underscored the need for vigilance, particularly in light of potential setbacks such as escalating regional conflicts, notably in the Middle East. Okonjo-Iweala highlighted that such conflicts could have far-reaching implications, affecting not only the countries directly involved but also global energy costs and shipping routes.
Despite the prevailing risks, the WTO acknowledged the possibility of some limited upside potential to its forecast. The organization suggested that interest rate cuts in advanced economies could spur stronger-than-expected growth without reigniting inflation, offering a glimmer of hope for a more robust trade performance in the coming years.
