WTO: Trade Growth to Slow Next Year 10/05 06:00
The World Trade Organization is predicting global trade volumes will grow a
lackluster 1% next year as crises and challenges weigh on markets, including
high energy prices, rising interest rates and uncertainties about Chinese
manufacturing output amid the lingering COVID-19 pandemic.
GENEVA (AP) -- The World Trade Organization is predicting global trade
volumes will grow a lackluster 1% next year as crises and challenges weigh on
markets, including high energy prices, rising interest rates and uncertainties
about Chinese manufacturing output amid the lingering COVID-19 pandemic.
The Geneva-based trade body said Wednesday that the amount of goods shipped
between countries are expected to rise 3.5% this year, up from the 3% that WTO
anticipated in its first forecast for the year in April.
In 2023, the prediction is for such trade volumes to grow just 1%, down from
the 3.4% expected previously.
"The risks are certainly to the downside" next year, WTO Director-General
Ngozi Okonjo-Iweala told reporters at the group's headquarters in Geneva.
This year, the higher predicted increase in trade volumes stems from better
data that arrived in the middle of the year, contributing to a clearer
forecast, and a boom in trade volumes from oil- and gas-producing countries in
the Middle East as supplies from Russia were shunned and consuming countries
sought alternative sources, WTO economists say.
The WTO laid out several factors weighing on trade, including higher energy
prices resulting from Russia's war in Ukraine, which prompted a number of
countries -- including European Union members that are big consumers of Russian
oil and natural gas -- to slap economic sanctions on Moscow.
"Today, the global economy faces a multipronged crisis," Okonjo-Iweala said.
"Monetary tightening is weighing on growth across much of the world, including
in the United States. In Europe, high energy prices are squeezing households
and businesses. And in China, COVID-19 outbreaks continue to disrupt production
and ordinary economic life."
"Low-income developing countries in particular face serious risks from food
insecurity and debt distress," she added.
While global trade has rebounded from a deep slump in the early days of the
COVID-19 pandemic, U.S. Federal Reserve and other central bank moves to choke
off inflation through higher interest rates are likely to have knock-on effects
for crucial spending in areas like housing, vehicle sales and bond prices, the
The trade body said, however, that new information from purchasing managers
on final goods prices and an index of input prices suggested that inflationary
pressures "may have peaked" -- a factor that could influence decision-making
from central bankers in the months ahead.
Shrinking demand and the continued fallout from the coronavirus pandemic is
likely to crimp exports out of China, the world's manufacturing powerhouse, the
WTO senior economist Coleman Nee said Russia hasn't reported its trade
figures to the global trade body since January, clouding the picture about how
Russian trade was faring. The group said Confederation of Independent States
countries -- made up of most of the former Soviet states -- saw exports drop
nearly 10.5% in the second quarter from the first three months of the year.
The WTO -- just one of several multilateral organizations that predicts
economic output fluctuations -- says it expects global gross domestic product
to increase by 2.8% this year and 2.3% next year, down from 3.2% predicted in
Rising food and energy costs have weighed on the global economy. Food prices
have jumped largely due to the impact of Russia's war in Ukraine -- the
countries are big suppliers of grain -- and that has weighed on many developing
countries that have seen supplies of wheat and corn dry up as exports from the
war-torn Black Sea region have slumped.
Natural gas prices in Europe also soared 350% in August compared with a year
earlier and were up 120% over the same period in the United States, the WTO
said. Prices have since moderated.
"Most regions are set to register faintly positive export growth in 2023,
with the exceptions of Africa and the Middle East, where export growth is
projected to turn negative after growing strongly this year on the back of
heightened demand for oil," Okonjo-Iweala said.