WTO sees trade growth, but warns of risks

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A new report forecasts growth of 5.6 percent in global trade in 2024.

The World Trade Organization's (WTO's) latest forecast has predicted a rebound in activity this year following a decline in 2023. However, it also warned there are a range of risks that have the potential to disrupt international trade that nations and businesses must be aware of.

Overall, the organization's latest Global Trade Outlook and Statistics report anticipates a total increase in world merchandise trade of 2.6 percent this year, followed by a 3.3 percent rise in 2025. This comes after a decline of 1.2 percent in 2023.

Key reasons for this include easing inflationary pressures and stabilizing energy prices. This has allowed real incomes to rise, especially in developed economies, which has offered a boost to trade in manufactured goods.

Director-general of the WTO Ngozi Okonjo-Iweala said: “We are making progress towards global trade recovery, thanks to resilient supply chains and a solid multilateral trading framework - which are vital for improving livelihoods and welfare. It's imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability.”

Among the potential disruptions to trade that could dent these figures include conflict in the Middle East that may affect key shipping routes. The WTO report noted that while so far, the economic impact of Suez Canal disruptions has been relatively limited, it has led to delays in some sectors, such as automotives, fertilizers and retail goods.

Elsewhere, a shortage of freshwater on the Panama Canal has also caused disruptions to major supply chains. Political tensions may also lead to the realignment of traditional routes, with the report noting, for example, that bilateral trade between the US and China has stalled recently, growing by 30 percent less in 2023 than trade with the rest of the world.

WTO chief economist Ralph Ossa said: “Some governments have become more skeptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations.”