GENEVA: The World Trade Organization (WTO), in its annual trade forecast released on Wednesday, projected a rebound in global trade this year following an unexpected downturn in 2023. However, the organization cautioned that regional conflicts, geopolitical tensions, and economic policy uncertainties could pose risks to this outlook.
According to the WTO’s chief economist Ralph Ossa, world trade volumes experienced an unexpected decline of 1.2 percent in 2023, primarily attributed to Europe’s underperformance. Factors such as high energy prices and inflation contributed to a decrease in demand for manufactured goods, leading to stagnation in the eurozone economy.
Despite these challenges, the WTO anticipates a modest recovery in the global trade of goods, with merchandise trade volumes expected to increase by 2.6 percent in 2024 and expand further by 3.3 percent in 2025. However, the forecast for 2024 is slightly lower than previously predicted, reflecting ongoing uncertainties.
WTO Director-General Ngozi Okonjo-Iweala emphasized the importance of mitigating risks such as geopolitical strife and trade fragmentation to ensure sustained progress in global trade recovery.
While trade developments in services were more positive, growing by nine percent last year, the WTO expects further growth in this sector, particularly linked to events like the upcoming Olympic Games in Paris and the European football championships.
Despite predictions of a rebound, the WTO warned of potential challenges ahead, including geopolitical tensions, policy uncertainty, and disruptions in global supply chains.
The WTO also raised concerns about growing protectionist behavior and trade fragmentation, exemplified by bilateral trade imbalances between major economies like the United States and China. The organization underscored the need for countries to reevaluate their trade policies amid evolving geopolitical dynamics and electoral processes worldwide.
WTO Chief Economist Ralph Ossa stressed the significance of trade policy certainty in fostering international trade, emphasizing the potential impact of policy decisions made in key elections this year.
