WTO cuts global goods trade forecast citing broad-based slowdown

Global goods trade will grow at less than half the pace predicted six months ago, the World Trade Organization said, citing inflation in the US and Europe, a prolonged war in Ukraine and China’s sluggish recovery.

The Geneva-based institution said it expects the volume of merchandise trade in 2023 to increase 0.8% from last year, compared with its April forecast for a 1.7% gain, according to a report released Thursday. That’s well below the average of 2.6% annual growth registered since the global financial crisis. 

“The trade slowdown appears to be broad-based, involving a large number of countries and a wide array of goods, specifically certain categories of manufactures such as iron and steel, office and telecom equipment, textiles, and clothing,” the WTO said. “Inflation, high interest rates, US dollar appreciation and geopolitical tensions are all contributing.”

After growth of 3% last year, goods trade in the first half of 2023 was down 0.5% from a year earlier, today’s report said, with only a “modest pickup” expected in the months through December. One exception is passenger vehicles, which saw surging sales so far in 2023. 

“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. “Global economic fragmentation would only make these challenges worse.”

For 2024, the WTO’s forecast for goods trade growth is of 3.3%, nearly unchanged from April. This would outstrip an expected expansion in global gross domestic product of 2.5%. The risks to the current outlook are “considered to be evenly balanced,” the WTO said in Thursday’s report, a change from April when it said “risks to the forecast are tilted to the downside.”

While there were some initial signs of economic fragmentation — reflected in a declining share of intermediate goods in world trade — the WTO said that the shift doesn’t indicate a dramatic shift toward deglobalization.