The World Trade Organization (WTO) has released its 'Global Trade Outlook and Statistics' update for October 2023, revealing a downward revision in trade growth forecasts due to a global manufacturing slowdown that began in Q4 2022. While the outlook for 2023 has been scaled back, economists maintain a more optimistic view for trade in 2024, according to the report released by the WTO.
According to the WTO's update, global trade and economic output experienced a sudden slowdown in the fourth quarter of 2022 due to tighter monetary policies in major economies like the United States and the European Union. However, the end of pandemic restrictions in China and decreasing energy prices offer optimism for a swift recovery. Although the volume of world merchandise trade is expected to grow by 0.8% this year, down from the earlier forecast of 1.7% in April, the projection for 2024 remains relatively stable at 3.3%.
“The projected slowdown in trade for 2023 is cause for concern, because of the adverse implications for the living standards of people around the world,” WTO Director-General Ngozi Okonjo-Iweala said in a WTO news release. “Global economic fragmentation would only make these challenges worse, which is why WTO members must seize the opportunity to strengthen the global trading framework by avoiding protectionism and fostering a more resilient and inclusive global economy. The global economy, and in particular poor countries, will struggle to recover without a stable, open, predictable, rules-based and fair multilateral trading system.”
During the first half of 2023, global merchandise trade, measured in current US dollars, fell by 5% YoY, mainly due to lower commodity prices and US dollar appreciation, though it remained 27% higher than 2019 levels. Declines were notable in sectors like fuels and mining products (-15%), iron and steel (-17%), and textiles (-16%), but manufactured goods saw a milder 4% decrease, with strong growth in automotive products (18%) and other machinery (6%) according to the report released by the WTO.