Anjali Sharma
GG News Bureau
UNITED NATIONS, 7th Oct. World Trade Organization on Thursday has revealed a sharp slowdown in the global trade growth to lose momentum in the second half of this year and remain subdued in 2023, as the global economy sustains multiple shocks, such as ripple effects from the war in Ukraine.
WTO has cautioned against imposing trade restrictions which would ultimately result in slower growth and lower living standards, according to a press release issued in New York.
The agency said that global merchandise trade volume is estimated to grow 3.5 per cent in 2022, or slightly better than the 3.0 per cent anticipated in April.
The growth will slow to 1 per cent next year, a sharp decline from the 3.4 per cent previously estimated.
WTO said that demand for imports is expected to weaken as growth slows in major economies for different reasons.
It predicted that in Europe, high energy prices resulted from the Russian invasion of Ukraine will squeeze household spending and raise manufacturing costs.
The agency noted that in the United States, monetary policy tightening will affect spending in areas where interest rates count, such as housing, motor vehicles and fixed investments.
China also continues to struggle with COVID-19 outbreaks and production disruptions coupled with weak external demand, it said.
It showed that developing countries could face food insecurity and debt distress as import bills for fuels, food and fertilizers rise: another impact from the war in Ukraine.
According to the forecast, the energy prices jumped 78 per cent year-on-year in August. Food prices increased 11 per cent, grain prices were up 15 per cent and fertilizer 60 per cent.
WTO stressed that many currencies have fallen against the dollar in recent months, another factor that is making food and fuel more expensive.
WTO Director-General, Ngozi Okonjo-Iweala said that policymakers face “unenviable choices” as they try to find an optimal balance among tackling inflation, maintaining full employment, and advancing important goals such as transitioning to clean energy,
She underscored how trade is a vital tool both for enhancing the global supply of goods and services, as well as for lowering the cost to achieve net-zero carbon emissions.
“While trade restrictions may be a tempting response to the supply vulnerabilities that have been exposed by the shocks of the past two years, a retrenchment of global supply chains would only deepen inflationary pressures, leading to slower economic growth and reduced living standards over time,” she said.
She added “What we need is a deeper, more diversified and less concentrated base for producing goods and services. In addition to boosting economic growth, this would contribute to supply resilience and long-term price stability by mitigating exposure to extreme weather events and other localized disruptions.”
WTO said the Middle East will have the strongest export growth of any region this year, 14.6 per cent, followed by Africa, North America, Asia, Europe, and South America.
The region had the fastest trade volume growth on the import side at 11.1 per cent.
The Middle East and Africa should see small declines in exports in 2023, imports will remain strong.
The new forecast, released on Wednesday, revised estimates published in April, or just weeks after the start of the war in Ukraine.
WTO economists had to rely on simulations for their projections, in the absence of hard data about the conflict’s impact, the agency concluded.
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