According to the World Trade Organization (WTO) global trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023 as multiple shocks weigh on the global economy.
WTO economists now predict global merchandise trade volumes will grow by 3.5% in 2022 – slightly better than the 3.0% forecast in April. For 2023, however, they foresee a 1.0% increase, down sharply from the previous estimate of 3.4%.
Import demand is expected to soften as growth slows in major economies for different reasons. In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment. China continues to grapple with COVID-19 outbreaks and production disruptions paired with weak external demand.
If the current forecast comes true, trade growth will slow sharply but remain positive in 2023. The WTO notes 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.