WTO predicts “subpar” global trade growth with multiple risks in 2023

By Cynthia Ezekwe .

The volume of world merchandise trade was up 2.7 per cent in 2022, while the value rose 12.4 per cent due to a hike in commodity prices worldwide amid the war in Ukraine and economic recovery from the Covid-19 pandemic.

But the World Trade Organisation  (WTO), in its new Global Trade Outlook and Statistics for 2023,  has projected a “subpar” increase  of 1.7 per cent for trade and output growth in the year, as  stubbornly high inflation and tighter financial conditions weigh on consumption and investment  globally.

According to the world’s largest international economic organization,  high inflation, monetary tightening, geopolitical tensions, energy insecurity and the risk of financial instability dampened  the overall outlook for trade despite year-on-year growth in 2022.

The WTO report disclosed that China remained the top merchandise exporter in 2022, but its share in world exports declined to 14 per cent , down from 15 per cent  in 2021.

Meanwhile, exports of goods and services from the least-developed countries jumped by 31 per cent  between 2019 and 2022, with goods exports up 41 per cent  in value terms.

The weak outlook for 2023 presumed that high inflation and rising interest rates would sap global GDP growth and reduce demand for traded goods in leading economies.

The WTO analysts also believe that growth potential is declining within advanced and developing economies alike, and have argued that one factor responsible is the slow but steady slowdown in global trade compared to economic output over the past decade.

Commenting on the report, Ngozi Okonjo-Iweala, the WTO director-general  described the past year as another tumultuous one for the world economy and for global trade.

 “As a succession of crises buffet the global economy, with the Covid-19 pandemic giving way to the war in Ukraine, inflation, monetary tightening, and widespread debt distress, world trade has lost momentum, with trade growth slowing in 2022 and remaining weak into early 2023,” Okonjo-Iweala said in the foreword to the WTO’s World Trade Statistical Review.

Okonjo-Iweala remarked that numerous downside risks, from geopolitical tensions to potential financial instability, are clouding the medium-term outlook for both trade and overall output.

On a positive note, Okonjo-Iweala pointed out that despite the shadow cast by rising geopolitical tensions, trade has proved itself to be a force for resilience and recovery, as the value of global goods and services trade in 2022 stood at a record $ 31.4 trillion.

Against the backdrop of diminished economic prospects facing people around the world,the WTO director-general said the need for multilateral cooperation on trade to combat fragmentation and bolster growth and productivity is stronger than ever,adding that the need to deepen, deconcentrate and diversify international supply networks will give developing economies significant commercial opportunities.

She noted that such cooperation remains possible, as seen in June 2022 at the WTO’s 12th Ministerial Conference (MC12) where 164 of the WTO members came together across geopolitical and substantive differences to deliver a series of ministerial decisions on fisheries subsidies, food security, pandemic response and e-commerce.

According to Okonjo-Iweala, they proved that the multilateral trading system can meaningfully contribute to solving global commons challenges and also showed the WTO is capable of acting swiftly to respond to pressing problems.

The Nigerian-American economist assured that the WTO will build on the success of MC12 so that it continues to fulfil its mandate of using trade as a means to improve living standards, create better jobs and promote sustainable development.

“MC13 will be an important opportunity for WTO members to show that last year’s ministerial was not a one-off miracle on Lake Geneva. We can and must continue to strengthen this vital institution and ensure that multilateral cooperation on trade does its part to provide solutions to problems facing people, nations and the wider global commons,” she added.