The World Trade Organization (WTO) on Wednesday said global goods trade volume is expected to grow 1.7 percent in 2023, compared with a previous estimate of 1 percent in October, but less than 2.7 percent growth in 2022.
The global trade organization warned that expectations would come in “below average” due to several factors including the ongoing Russia-Ukraine conflict, stubbornly high inflation, tightening monetary policy and financial uncertainty. This means trade growth is below the 12-year average of 2.6 percent since the trade collapse after the global financial crisis in 2008.
An upward revision of the 2023 growth forecast is mainly due to the easing of Covid-19 pandemic controls in China, which is expected to release “pent-up consumer demand” in the country. According to the WTO, this in turn should boost international trade.
“Rise rates in advanced economies have also revealed weaknesses in banking systems that, if left unchecked, could lead to greater financial instability. Governments and regulators will need to watch out for these and other financial risks in the coming months,” said WTO Chief Economist Ralph Ossa.
On the plus side, trade growth is expected to recover to 3.2 percent by 2024. However, the estimate is uncertain as much will depend on how the conflict between Russia and Ukraine develops.
Some of the risks include rising geopolitical tensions, global food insecurity, the possibility of unforeseen consequences of monetary tightening, risks to financial stability and rising debt levels. “Most severe would be a food crisis, triggering widespread famine and starvation in low-income countries. Wealthy countries need to be on the lookout for signs of such a crisis and take action in advance to prepare for it,” it said.
A 2.7 percent increase in world trade volume in 2022 was lower than the WTO’s October forecast of 3.5 percent, mainly due to a stronger-than-expected quarter-on-quarter decline in the fourth quarter due to elevated global commodity prices and monetary policy driven by tightening in response to inflation and Covid 19 outbreaks that disrupted manufacturing and trade in China.
India has a 1.8 percent share of global trade in goods, ranking 18th. In fiscal year 2022-23, India is expected to see trade in goods grow nearly 6 percent year-on-year to US$447 billion. In the case of imports, the share is 2.8 percent, in ninth place.
Among the world’s top exporters and importers of commercial services – including transportation, travel, commercial services, computer services – India’s share was 4.4 percent in exports and 4 percent in imports. India ranked seventh in exports and eighth in imports.
While the WTO’s trade forecast does not cover services, it says international tourism is on the path to full recovery three years after the pandemic broke out as mobility restrictions have been lifted around the world. “China’s borders are expected to kickstart regional and global travel in early January 2023. In recent years, China ranked as the largest outbound market and tourism contributor,” it said.