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WTO Sees Sharp Slowdown In Global Trade Volume Growth in 2023; Here’s Why

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The World Trade Organization (WTO) has said global trade is likely to grow at a very low pace of 1 per cent in 2023, compared with the 3.4 per cent estimated earlier. It also said the world trade may lose momentum in the second half of 2022 and remain subdued in 2023.

The Geneva-based trade body on Wednesday said the amount of goods shipped between countries is expected to rise 3.5 per cent this year, up from the 3 per cent that the WTO anticipated in its first forecast for the year in April.

At the group’s headquarters in Geneva, WTO Director-General Ngozi Okonjo-Iweala said, “Today, the global economy faces a multipronged crisis… Monetary tightening is weighing on growth across much of the world, including in the US. In Europe, high energy prices are squeezing households and businesses. And in China, COVID-19 outbreaks continue to disrupt production and ordinary economic life.”

“All the risks (are) on the downside. Looking ahead, a better response to the supply chain vulnerabilities exposed by the past two years is to build a more diversified, less concentrated base for producing goods and services,” she said.

The WTO said that if the current forecast is realised, trade growth will slow sharply but remain positive in 2023. It should be noted that there is a high degree of uncertainty associated with the forecast due to shifting monetary policy in advanced economies and the unpredictable nature of the Russia-Ukraine war.

“Major central banks are already raising interest rates in a bid to tame inflation but overshooting on tightening could trigger recession in some countries, which would weigh on imports. High interest rates in advanced economies could trigger capital flight from emerging economies, unsettling global financial flows. Escalation of the Russia-Ukraine war could also undermine business and consumer confidence and destabilise the global economy,” it said.

She acknowledged that monetary “policymakers are confronted with unenviable choices as they try to find an optimal balance among tackling inflation, maintaining full employment, and advancing important policy goals such as transitioning to clean energy.”

The WTO director-general said, “Now we have to weather what looks like an oncoming recession.”

India’s overall outbound shipments in September fell 3.52 per cent to $32.62 billion in September, while the trade deficit widened to $26.72 billion, due to a decline in exports in sectors such as engineering, ready-made garments of all textiles and rice.

Imports during the month, however, grew by 5.44 per cent to $59.35 billion as against $56.29 billion in September 2021, the data showed.

The exports during April-September 2022-23 rose by 15.54 per cent to $229.05 billion. The imports during the period increased by 37.89 per cent to $378.53 billion. The trade deficit during the first six months of the fiscal has widened to $149.47 billion as against $76.25 billion during April-September 2021-22.

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