The World Trade Organization (WTO) sharply lowered its forecasts on Wednesday in the face of strong global economic and geopolitical turbulence and expects, for 2023, a sharp slowdown in world trade, whose growth should nevertheless remain slightly positive.
“The picture for 2023 has darkened considerably,” World Trade Organization Director-General Ngozi Okonjo-Iweala said when presenting the forecast to reporters.
“The global economy is facing multidimensional crises. Monetary tightening is weighing on growth in much of the world,” she added.
The WTO expects world merchandise trade volume to grow by 3.5% in 2022 — slightly higher than the 3% increase forecast in April, mainly due to statistical revisions.
But it predicts a 1% increase for 2023, down sharply from the previous estimate of 3.4%.
Regarding the global gross domestic product (GDP), the new forecasts foresee an increase of 2.8% in 2022 and 2.3% in 2023 (i.e. 1 percentage point less compared to the previous forecasts for this last figure).
In comparison, the Organization for Economic Co-operation and Development (OECD), which has maintained its forecast at 3% for 2022, expects growth of 2.2% next year. The IMF, on the other hand, forecasts growth of 3.2% this year, and 2.9% in 2023.
Estimates released in April now look “overly optimistic, given that energy prices have soared, inflation is now spreading to more sectors and the war shows no signs of abating. “, says the WTO.
If the current forecasts are confirmed, trade growth will therefore slow down sharply in 2023, but it will nevertheless remain positive.
“A lot of uncertainty surrounds the estimates, simply because of the nature of the conflict (in Ukraine), and also the challenges facing monetary policy and fiscal policy,” explained WTO economist Coleman Nee.
“Tricky Choice”
For 2023, if the downside risks were to materialize, trade could fall by 2.8%, but in the event of positive surprises, it could increase by 4.6%, according to the WTO, which also does not rule out that the numbers fall outside this range.
Last week, Ms Okonjo-Iweala claimed the world was heading for a “global recession”.
“Policymakers face tough choices in their search for the optimal balance between fighting inflation, maintaining full employment, and achieving important goals like the clean energy transition,” he said. she pointed out on Wednesday.
“While it may be tempting to resort to trade restrictions to address the supply gaps that the shocks of the past two years have exposed, a reduction in global supply chains would only aggravate inflationary pressures. , ultimately leading to slower economic growth and lower living standards,” she warned.
Import demand is expected to weaken across the world as growth slows due to various factors in major economies.
In Europe, the rise in energy prices resulting from the war in Ukraine will lead to a reduction in household spending and increased costs in the manufacturing sector, details the WTO.
In the United States, the tightening of monetary policy will have repercussions on interest-sensitive spending in the areas of housing, automobiles and fixed-asset investment, for example. China continues to face new outbreaks of COVID-19 and production disruptions associated with weak external demand, the WTO continues.
Finally, rising fuel, food and fertilizer import bills could lead to food insecurity and debt distress in developing countries.
The WTO notes that the risks surrounding the forecast are numerous and interrelated.
It also indicates that excessive tightening of monetary policy could cause recessions in some countries.