Due to global uncertainties, the growth in world trade is likely to slow down to one per cent in 2023. The WTO has also projected a growth of 3.5% in global trade this year, as against the April estimate of 3%, as per WTO predictions. As numerous shocks weigh on the global economy, world trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023.
Now, the WTO economists forecast global merchandise trade volumes will grow by 3.5% in 2022, slightly better than the 3% forecast in April. For 2023, however, they foresee a 1% increase, down sharply from the early estimate of 3.4%. The prediction does not augur well for India as it is looking to increase its exports. A reduction in exports in sectors like engineering, readymade garments of all textiles and rice led to a contraction in the country’s overall outbound shipments by 3.52% to $32.62 billion in September, while the trade deficit expanded to $26.72 billion.
In the United States, monetary policy tightening will hit interest-sensitive spending in areas like housing, motor vehicles and fixed investment. China progresses to grapple with Covid-19 outbreaks and production disruptions paired with weak external demand.
Growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries. 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.