The Geneva-based trade organization announced that it now expects merchandise trade volumes to increase by 0.8% in 2023, marking a significant adjustment from its previous April estimate of 1.7%.
Looking ahead to 2024, the WTO anticipates a recovery in goods trade growth, with a projection of 3.3%. This forecast is largely in line with the April estimate of 3.2%. It is important to note that these revisions pertain exclusively to the trade in goods.
The WTO noted that the trade slowdown is widespread, impacting multiple countries and various goods. Notably affected sectors include iron and steel, office and telecom equipment, textiles, and clothing. However, the automotive sector has experienced strong sales in 2023, bucking the trend.
The organization highlighted that the risks associated with its forecast are balanced. Potential negatives include a sharper-than-expected slowdown in China and persistent inflation leading to prolonged high interest rates. Conversely, a rapid reduction in inflation could positively impact the forecast.
The WTO reiterated its concern about trade fragmentation resulting from global tensions but clarified that there is no substantial evidence of a broader trend toward de-globalization that would jeopardize its 2024 forecast.
One indicator of potential disruption in supply chains is the decline in the share of intermediate goods in world trade, which decreased to 48.5% in the first half of 2023 from an average of 51.0% over the previous three years. The WTO acknowledged that it remains unclear whether this decline is primarily due to geopolitical tensions or the general economic slowdown.
The organization stated, “The data suggest that goods continue to be produced through complex supply chains, but that the extent of these chains may have reached their high-water mark.”
WTO Director-General Ngozi Okonjo-Iweala expressed concern over the anticipated trade slowdown, emphasizing its potential impact on global living standards, particularly in economically disadvantaged regions. She warned that global economic fragmentation would exacerbate these challenges.
While the WTO’s forecast does not encompass services, the organization noted that growth in this sector appears to be moderating after a strong rebound in international tourism in 2022. Global commercial services trade rose by 9% in the first quarter of 2023, down from the 19% growth observed in the second quarter of 2022, according to the WTO.