The World Trade Organization (WTO) is expected to revise down its projections for global goods trade growth in 2023 and 2024, citing a less robust global economy and potential disruptions in shipping, particularly through the Suez Canal. The earlier estimates, released in October, anticipated a 0.8% growth for 2023 and a more optimistic 3.3% for 2024. However, recent geopolitical tensions and attacks on ships in the Red Sea by Yemen’s Iran-backed Houthis have prompted a reevaluation.
Chief Economist of the WTO, Ralph Ossa, expressed concerns that the initial growth estimates might have been “overly optimistic” due to the unforeseen challenges emerging on the global stage. The organization plans to unveil the revised figures in approximately two months, reflecting the evolving economic landscape.
Ossa highlighted a 1.4% year-on-year decline in merchandise trade during the first three quarters of 2023, with Europe underperforming expectations, and the post-COVID recovery of China not attaining anticipated strength. While the fourth quarter exhibited a slight improvement, uncertainties prevail regarding whether the growth for 2023 will remain positive.
Despite the challenges, Ossa emphasized the resilience of the global economy and international trade. With the exception of 2020, marked by the COVID-19 pandemic, global merchandise trade has demonstrated consistent growth over the past decade.
Looking ahead to 2024, several international organizations had revised downward their GDP growth forecasts, potentially influencing the WTO’s trade predictions. Nonetheless, he remains cautiously optimistic, expecting goods trade to outperform 2023, despite the headwinds.
Ossa also pointed out the continued expansion of services trade, witnessing a remarkable 9% year-on-year increase in the first half of 2023. He highlighted the surge in digitally delivered services as a significant contributor to this growth.
Discussing the potential impact of disruptions in the Suez Canal, Ossa anticipated that the aftermath might result in higher prices for consumers due to increased shipping costs. While acknowledging the potential for inflationary pressures, he suggested that any impact on Europe would likely be marginal, measured in decimals of a percentage point rather than a substantial shock.
In conclusion, the WTO underscores the need for vigilance amid evolving global dynamics, signaling a cautious approach to their earlier optimistic trade growth estimates.
Source: reuters
