The World Trade Organization established the projections for world trade growth for 2024 and 2025, placing them at 2.7 % and 3 %, respectively.

According to the international institution, it has established the estimates taking into account destabilizing factors such as the increase in geopolitical tensions and economic policies, in addition to inflation and the reduction of interest rates in the different regions.

“World merchandise trade is set to rise by 2.7 % this year, after a 1.1 % decline in 2023, which would mean a recovery pace slightly higher than the 2.6 % projected last April by the World Trade Organization (WTO).”

On inflation, a factor that increases distrust in the world’s economies, the WTO stresses that by mid-2024 it had fallen enough “to allow central banks to begin lowering interest rates, adding that lower inflation should increase household real income and encourage consumer spending, while lower interest rates should increase business investment.”

However, it is forward-looking and warns that “divergent monetary policies among major economies could lead to financial volatility and changes in capital flows, as central banks reduce interest rates, which could make debt service more difficult, particularly for poorer economies.”

The organization is optimistic but alert, according to the director general of the WTO, Ngozi Okonjo-Iweala, regarding possible setbacks that may arise from the worsening of regional wars, such as those in the Middle East.

She stressed that since the creation of the organization, three decades ago, per capita income in middle- and low-income economies has almost tripled, so in her opinion it is necessary to continue “working collectively to guarantee global economic stability and sustained growth, since they are essential to improve the well-being of people around the world.”

The WTO has detailed that the short-ter short-t m outlook for trade in services is more positive than for goods, “with an 8 % year-on-year growth in dollars in trade in commercial services during the first quarter of 2024.”

M.Pino

Source: americaeconomia

(Reference image source: Amira El Fohail en Unsplash)

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The World Trade Organization (WTO) Goods Trade Barometer reported that the volume of global goods trade has seen a recovery after a recent contraction. This improvement is mainly attributed to the boost generated by the production and sale of automobiles, as well as the dynamism in the trade of electronic components.

Despite these encouraging signs, the near-term outlook is uncertain due to mixed economic performance and rising geopolitical tensions.

The barometer’s current index stands at 100.7 points, surpassing the previous reading of 99.1 points in August and approaching the reference value of 100. According to the WTO, this suggests that the volume of merchandise trade will gradually return to its trend in the medium term in the second half of 2023, as reported by Bloomberg.

Barometer reveals stability in global merchandise trade

The Merchandise Trade Barometer, a leading indicator that provides real-time information on the trajectory of trade in goods, has shown that the volume of global merchandise trade remained stable in the second quarter of 2023, with a slight increase of 0.2 % compared to the previous quarter, although registering a year-on-year decrease of 0.5%.

Third-quarter trade statistics are anticipated to be slightly stronger thanks to GDP growth in the United States and China, although economic stagnation in the European Union continues to affect global demand.

Despite these challenges, the WTO projects strong year-on-year growth in trade during the fourth quarter, driven by the reduction in trade in the same period last year and pandemic-related disruptions.

These forecasts are in line with WTO estimates from October 5, 2023, which predicted a 0.8% increase in global trade volume.

K. Tovar

Source: Bloomberg

(Reference image source: Ian Taylor, Unsplash)

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The World Trade Organization (WTO) announced that global merchandise trade growth in volume this year will be just 0.8 %, which represents less than half of the initial April projection of 1.7 %. This drastic slowdown is attributed to rising geopolitical tensions and inflation.

WTO Director-General Ngozi Okonjo-Iweala expressed concern about this slowdown and its impact on global living standards. In a statement, she warned that “the slowdown in trade expected for 2023 is worrying, as it has unfavorable effects on the standard of living of people around the world.”

According to the organization’s report, this slowdown began in the fourth quarter of 2022 and has led to the downward revision of business projections for this year. However, a more positive outlook remains for 2024, with trade growth forecast at 3.3 %, slightly higher than the 3.2 % previously forecast. Regarding real GDP, stable growth of 2.5 % is expected.

WTO chief economist Ralph Ossa noted that “positive growth in exports and imports should recover in 2024, but we must remain vigilant.”

The slowdown in merchandise trade affects numerous countries and sectors, including iron, steel, office and telecommunications equipment, textiles and clothing.

Despite the challenging outlook for this year, the WTO remains cautiously optimistic for 2024. However, it continues to warn of the potential negative impact of a split of global trade into two geopolitical blocs in the wake of Russia’s invasion of Ukraine. The director general of the WTO urges strengthening the global trading environment and avoid protectionism to avoid a “fragmentation of the global economy.”

K. Tovar

Source: Bancaynegocios

(Reference image source: Unsplash+)

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