Despite ongoing concerns over the war in Ukraine, high inflation, and financial uncertainty, the World Trade Organization (WTO) has raised its projection for global trade growth in 2023 from 1% to 1.7%. This updated outlook indicates that the global economy is expected to recover faster than previously anticipated. However, the risks associated with these persistent issues remain, and could still impact the growth trajectory of the global trade landscape.
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Despite an upward revision in the World Trade Organization’s (WTO) growth forecast for 2023, the global trade body has cautioned that the trade growth is expected to remain subpar due to multiple factors. These factors include ongoing conflicts such as the Russia-Ukraine conflict, stubbornly high inflation, tighter monetary policy, and financial uncertainty.
The projected trade growth of 1.7% for 2023 is also below the 12-year average of 2.6%, which has been the norm since the global financial crisis in 2008.
However, the WTO has noted that the relaxation of COVID-19 pandemic controls in China is expected to “unleash pent-up consumer demand” in the country and contribute to the boost in international trade.
WTO Chief Economist Ralph Ossa has also warned that interest rate hikes in advanced economies have revealed weaknesses in banking systems that could lead to wider financial instability if left unchecked. He emphasized the need for governments and regulators to remain alert to these and other financial risks in the coming months.
Amid the uncertainties and risks facing global trade, there is some positive news as the World Trade Organization (WTO) expects trade growth to rebound to 3.2% in 2024. However, this estimate remains uncertain and heavily dependent on the outcome of the conflict between Russia and Ukraine.
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