World trade is moving forward at idle. The forecasts that the World Trade Organization (WTO) presented yesterday indicate that the volume of goods will barely grow by 1.7% in 2023. It is a result that the organization described as "mediocre" and that, in effect, it is below the average of 2.6% recorded during the last 12 years. At the same time, the WTO predicts that global GDP growth, at real exchange rates, will be 2.4%.
The reasons for the brake on trade growth are well known: inflation, the tightening of monetary policy with rising interest rates, geopolitical tensions, food insecurity and risks arising from the war in Ukraine. Restrictions due to the covid pandemic have ceased to be a serious threat. In fact, the WTO yesterday improved the forecasts for October - which placed the growth of world trade at just 1% during 2023 - because China has relaxed the measures to control the pandemic.
Those threats should ease next year, when the WTO forecasts merchandise trade growth to pick up to 3.2% as economic expansion picks up and China fully reopens its borders
The body's forecasts do not cover services, but the WTO said international tourism was on the way to a full recovery and travel demand did not appear to have been affected by economic uncertainty.
Despite this, the director general, Ngozi Okonjo-Iweala, warned yesterday that "trade will continue to be under pressure from external factors. That is why it is even more important that governments avoid the fragmentation of trade and refrain from introducing obstacles. Investing in multilateral cooperation in the field of trade would strengthen economic growth and people's living standards in the long term," he said.
Among the risk factors are planting in Ukraine, one of the main producers of cereals, floods or drought caused by climate change. Smallholder African farmers, in particular, need affordable fertilizers to increase production.
In this sense, Okonjo-Iweala stated that it is vital to reduce obstacles and limit restrictions on the export of food. In fact, some 35 countries have imposed 100 food and fertilizer restrictions since Russia invaded Ukraine in February 2022. These restrictions eased in mid-2022, but have since increased to 67 as of early April 2023.
Despite the unfavorable situation, the value of commercial transactions has skyrocketed due to inflation. In this sense, contrast the growth of 2.7% that was registered in 2022 with the increase of 12% in the value of goods, which reached 25.3 billion dollars (about 23.2 billion euros ). As for the value of trade in services, this also soared by 15% annually, up to 6.8 billion dollars (around 6.2 billion euros).
