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TWN
Info Service on WTO and Trade Issues (Apr24/13) Geneva, 12 Apr (D. Ravi Kanth) — World merchandise trade in volume terms is expected to grow by 2.6 percent this year, after a larger-than-expected decline of minus 1.2 percent last year due to weak import demand in major industrialized countries, with the Middle East and the former Soviet republics being the exception, said WTO economists on 10 April. In its report on “Global Trade Outlook and Statistics”, the WTO predicted that global trade is expected to grow at 3.3% in volume terms in 2025, a figure that could undergo further change as headwinds continue to show no signs of abating. The report suggests that real GDP (gross domestic product) growth at market exchange rates slowed from 3.1% in 2022 to 2.7% in 2023. It is expected to remain “mostly stable over the next two years at 2.6% in 2024 and 2.7% in 2025.” With globalization in rapid decline, and “re-shoring” and “friend-shoring” having become the new mantras of global trade, the drop in merchandise trade in dollar terms is much more pronounced. According to the report, “the US dollar value of world merchandise trade fell 5% in 2023 to US$24.01 trillion but this decline was mostly offset by a strong increase in commercial services trade, which rose 9 percent to US$7.54 trillion.” The latest media reports from the US indicate that inflation is continuing to hover at around 3.5 percent, forcing the US Fed to continue with its high interest rate policies. At a time when existing supply chains are being disrupted/dismantled, the WTO’s Director-General, Ms Ngozi Okonjo-Iweala, remains confident about “resilient supply chains and a solid multilateral trading framework.” She said, “it’s imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability.” After the collapse of the WTO’s 13th ministerial conference (MC13) in Abu Dhabi and the increasing efforts to embrace plurilateral agreements on domestic regulation in services, and now on Investment Facilitation for Development (IFD), as well as the continued paralysis of the WTO’s enforcement function, the prospects for a “solid multilateral trading framework” appear to be evaporating. According to the WTO’s press release, “import volumes were down in most regions but especially in Europe, where they fell sharply. The main exceptions were large fuel-exporting economies, whose imports were sustained by strong export revenues as energy prices remained high by historical standards. World trade remained well above its pre-pandemic level throughout 2023. By the fourth quarter it was nearly unchanged compared to the same period in 2022 (+0.1%) and had only risen slightly compared to the same period in 2021 (+0.5%).” On the downside risks, the report warned that “geopolitical tensions and policy uncertainty could limit the extent of the trade rebound,” and that “food and energy prices could again be subject to price spikes linked to geopolitical events.” While admitting that “geopolitical tensions have affected trade patterns marginally,” it said that there has been no “sustained trend toward de-globalization.” According to the report, “Bilateral trade between the United States and China, which reached a record high in 2022, grew 30 percent less in 2023 than did their trade with the rest of the world.” It said that “signs of fragmentation may also be emerging in services trade: US imports of information, computer, and telecommunications (ICT) services from North American trading partners (mostly Canada) increased from 15.7% of total ICT imports in 2018 to 23.0% in 2023 while US imports of the same from Asian trading partners (mostly India) fell from 45.1% to 32.6%. Fragmentation of data flow policies along geopolitical lines, moreover, could cause global trade of goods and services in real terms to fall by 1.8% and global GDP to decline by 1% according to estimates from a forthcoming study by the Organisation for Economic Co-operation and Development and the WTO.” Significantly, WTO Chief Economist Ralph Ossa said: “Some governments have become more sceptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations.” “The resilience of trade is also being tested by disruptions on two of the world’s main shipping routes: the Panama Canal, which is affected by freshwater shortages, and the diversion of traffic away from the Red Sea. Under these conditions of sustained disruptions, geopolitical tensions, and policy uncertainty, risks to the trade outlook are tilted to the downside,” he added. +
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