The World Trade Organization halved its growth forecast for global goods trade this year, saying that persistent inflation, higher interest rates, a strained Chinese property market and the war in Ukraine had cast a shadow over its outlook.
The Geneva-based trade body said on Thursday merchandise trade volumes would increase by just 0.8% in 2023, compared with its April estimate of 1.7%.
For 2024, it said goods trade growth would pick up to 3.3%, a forecast virtually unchanged from its April estimate of 3.2%.
The WTO said the trade slowdown was broad-based, involving a larger number of countries and goods, though particularly iron and steel, office and telecoms equipment, textiles and clothing.
Cars were a notable exception, with surging sales this year.
The WTO said risks to its forecast were balanced. A sharper than expected slowdown in China and resurgent inflation, keeping interest rates higher for longer, were potential negatives. However, a rapid easing of inflation could raise the forecast.
The 164-member trade body repeated its warning that it saw some signs of trade fragmentation linked to global tensions, but no evidence of a broader de-globalisation that could threaten its 2024 forecast.
One sign was that the share of intermediate goods in world trade, an indicator of global supply chain activity, fell to 48.5% in the first half of 2023, compared to an average of 51.0% over the previous three years.
The WTO said it was not clear if the decline was due to geopolitical tensions or the general economic slowdown.
"The data suggest that goods continue to be produced through complex supply chains, but that the extent of these chains may have reached their high-water mark," the WTO said.
WTO Director-General Ngozi Okonjo-Iweala said the expected slowdown of trade was a cause for concern because it could depress the living standards of people around the world, particularly in poor countries.
"Global economic fragmentation would only make these challenges worse," she said
The WTO's forecast does not cover services, but the WTO said growth was moderating after a strong rebound in international tourism in 2022. Global commercial services trade rose 9% in the first quarter of 2023, down from 19% in the second quarter of 2022, the WTO said.
