WTO Cuts Global Trade Outlook Amid Weak Momentum

A surge in trade volumes that started in 2020 is bottoming out due to multiple economic factors that include weakened household demand, higher interest rates and an uptick in energy costs.

Exports and imports are anticipated to increase just 1% next year, down from a previous forecast of 3.4%, the World Trade Organization (WTO) said Wednesday (Oct. 5) in a new report.

The Geneva-based body tasked with rule enforcement for international trade said that global merchandise trade volume is anticipated to grow 3.5% in 2022 — a bit more than the 3.0% previously forecasted in April.

But there is a high risk of a global recession as inflationary pressures slow in more developed nations, coinciding with easing port congestion and declines in freight charges, according to the report.

See also: UN Report: Clock Ticking to Dodge Global Recession Worse Than ‘08

“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. Trade is a vital tool for enhancing the global supply of goods and services, as well as for lowering the cost of getting to net-zero carbon emissions,” WTO Director-General Dr. Ngozi Okonjo-Iweala said in a statement.

“While trade restrictions may be a tempting response to the supply vulnerabilities that have been exposed by the shocks of the past two years, a retrenchment of global supply chains would only deepen inflationary pressures, leading to slower economic growth and reduced living standards over time,” she added.

Read more: Shifting Global Trade Winds Lead to Blank Sailings, Lower Cargo Rates

Russia’s war on Ukraine has caused prices for commodities like food, fuel and fertilizers to be higher than normal, the report noted. Shifting monetary policies in advanced economies are also causing a certain amount of uncertainty in forecasting, per the report.