The World Trade Organization (WTO) has more than halved its growth forecast for world trade in goods this year. Persistent inflation, higher interest rates, a tight Chinese real estate market and the war in Ukraine cloud the outlook, the WTO announced on Thursday. The goods trade volume will therefore only increase by 0.8 percent in 2023. In April, the organization assumed 1.7 percent.
She is slightly more optimistic for next year: world trade is expected to grow by 3.3 percent, after the previously estimated plus 3.2 percent. WTO Director-General Ngozi Okonjo-Iweala said the expected slowdown in trade this year was worrying.
Living standards could fall around the world
This could lead to a decline in living standards around the world, but especially in poor countries. “The fragmentation of the global economy would only exacerbate these challenges,” the Nigerian warned. The WTO said the slowdown in trade was broad-based. It affects a greater number of countries and goods, but especially iron and steel, office and telecommunications equipment, as well as textiles and clothing.
Warning about fragmentation in the global exchange of goods
The World Trade Organization only warned at the beginning of the week of fragmentation in global goods trade. “We don’t see large-scale fragmentation yet, but there are early signs,” WTO chief Okonjo-Iweala said at an event in Geneva. She called this trend dangerous. It can also become ‘very expensive’.
With her comments, the WTO chief alluded to trends such as so-called ‘friendshoring’. This means that business processes are moved to countries where similar values are shared. For example, a number of Western companies are looking for alternatives to China as a production location.
There is concern in the executive branches that if the PRC attacks Taiwan, similar sanctions from the West could follow as against Russia after it began attacking Ukraine. The head of the WTO also spoke about ‘reshoring’. This is the name given to the relocation of production facilities from emerging countries back to industrialized countries.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
