The World Trade Organization's forecast that global trade in goods will grow by 1.7 percent this year is too optimistic according to many institutions. Oxford Economics predicts trade will shrink by 0.6 percent, while ING economists forecast 1 percent growth for this year.
The World Trade Organization (WTO) stated a few weeks ago that trade in goods will grow by 1.7 percent in 2023, but this forecast already seems a little optimistic.
Oxford Economics predicted on Friday that global trade in goods will contract by 0.6 percent this year, pointing to a decline in the outlook for the 0.2 percent decline in December.
Oxford Chief Economist Adam Slater, who stated that trade generally fell more than GDP during global recessions, listed a few reasons for both a darker and more optimistic outlook:
“Industry weakness in areas still grappling with pandemic disruptions such as automobiles, aerospace, and semiconductors as Oxford negative factors; raising interest rates by central banks, which reduces global demand, primarily for capital assets; The West, which has moved away from China with emphasis on trade from close borders, is likely to continue to do so, and lower foreign direct investment, which may pose a problem for trade in the medium term”.
On the positive side, the institution noted that energy prices have peaked, freight costs have returned to pre-pandemic levels and service trade has recovered strongly.
ING economist Rico Luman predicts a 1 percent growth in goods trade this year and 2 percent next year. In a report published on April 20, which he co-authored with Bert Colijn, Luman noted that trade has fallen more than 5 percent since September last year.
Effects of the Ukrainian War
The differences in forecasts for trade growth reflect growing uncertainties caused by factors such as possible recessions in advanced economies, deepening divisions between the US and China, and Russia's war in Ukraine.
According to the news of Alberto Nardelli and Ewa Krukowska from Bloomberg, the European Union will propose to impose a ban on many goods in transit through Russia, as part of a new sanctions package prepared by the European Commission.
