The latest release of the "Global Trade Outlook and Statistics" by the World Trade Organization (WTO) offers revised projections for global trade in 2023 and 2024.
In 2023, the WTO has revised its forecast for the growth of world merchandise trade volume, downgrading it to 0.8%. This is less than half of the 1.7% growth rate predicted in April. However, the outlook for 2024 remains relatively robust, with an anticipated trade growth rate of 3.3%, slightly higher than the previous estimate of 3.2% in April.
Several factors have contributed to this revised forecast. In the global economy over the past year, rising inflation and high interest rates since the fourth quarter of 2022, particularly in the European Union and the United States, have posed challenges. Despite falling energy prices and the easing of COVID-19 restrictions in China, strained property markets have hindered a more robust recovery in China. Additionally, the ongoing conflict in Ukraine continues to weigh on the global economy.
The trade slowdown observed in the first half of 2023 appears to affect a wide range of economies and goods, particularly certain categories of manufactured goods like iron and steel, office and telecom equipment, and textiles and clothing. Notably, sales of passenger vehicles have surged in 2023.
The anticipated stronger growth in 2024 is expected to be driven by increased trade in goods closely linked to the business cycle, such as machinery and consumer durables, which typically recover when economic growth stabilizes.
Growth in world GDP at market exchange rates is expected to be 2.6% in 2023, showing little change since the April forecast. However, shifts in the regional composition of growth could influence trade. Notably, GDP growth rates have been revised upwards for North America in 2023 and 2024, while estimates for Asia have been revised downwards. European GDP growth is expected to slightly increase in 2023 but decrease in 2024. Output in the Commonwealth of Independent States (CIS) region is expected to be stronger than previously forecast for both years.
In terms of imports, demand appears to be weakening in manufacturing economies, with import volumes in 2023 expected to contract in various regions. Meanwhile, regions that disproportionately export fuels are expected to see increased imports due to higher fuel prices.
The report also addresses the issue of trade fragmentation, which has been a topic of concern. While some initial signs of fragmentation are observed, there is no evidence of broad-based de-globalization. For instance, the share of intermediate goods in world trade, an indicator of the extent of global supply chains, has decreased slightly but remains relatively stable. Similarly, the share of politically like-minded trading partners in US total trade has seen a minor increase but remains close to pre-pandemic levels.
These findings align with previous reports and do not suggest significant de-globalization at this time. However, ongoing monitoring of these trends will be essential.