WTO sees 2023 trade growth down as Ukraine worsens

On April 20, 2020, a Japanese cargo ship sails along Southampton Water in Southampton, England. ADRIAN DENNIS AFP GENEVA - The World Trade Organization predicted a slow down of global trade growth next year as higher energy and food prices and rising interest rates curb import demand and warned of a possible contraction if the conflict in Ukraine worsens.

The Geneva-based trade body said on Wednesday that merchandise trade would increase by 3.5 percent this year, up from its April estimate of 3.0 percent. It saw trade growth of just 1.0 percent for 2023, compared to the previous forecast of 3.4 percent.

There was high uncertainty regarding its forecasts, according to the WTO. It provided a band of trade growth expansion of 2.0 percent to 4.9 percent for this year and of 2.8 percent to 4.6 percent for 2023.

The picture for 2023 has darkened considerably, WTO Director-General Ngozi Okonjo-Iweala said at a news conference that the risks for next year's forecast were more on the downside.

She said that if Ukraine's conflict worsens, rather than gets better, it's going to have a huge impact, she said.

Trade growth could be further hampered by weather events hitting food-producing regions or damaging energy export infrastructure.

She said the world needed to have a more diversified base for production of goods and services, which should boost growth, increase resilience and promote long-term price stability by mitigating exposure to extreme weather events and local disruptions.

She warned against the tempting response to trade restrictions, saying curbs imposed by various countries on food and fertilizer exports had dropped from 57 to 42 in the past month, but then rose back to 53 due to new measures.

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She told a news conference that these would only deepen inflationary pressures and reduce living standards and make us more vulnerable to the crisis we are grappling with.

The WTO's forecast does not cover services, but the WTO said tourist arrivals were likely to fall after tripling in the first seven months of 2022. It said that shipping rates might have been greeted before as a sign of supply chains improvements, but was probably more a result of cooling demand.