WTO downgrades its 2023 economic forecast and warns about China

The World Trade Organization (WTO) reduced its economic forecast for the next two years on Tuesday, April 12. The organization also cautioned that Russia’s assault on Ukraine isn’t the only thing jeopardizing the already fragile resumption of world trade.

The upsurge of lockdowns in China to combat the spread of new covid-19 cases could lead to additional shortages of inputs necessary for industrial production and higher inflation.

According to recent WTO official data, with the crisis in Ukraine, the volume of goods traded might increase by only 3% this year, down from 4.7% previously predicted. Trade may grow by 3.4% next year, but this forecast is fraught with uncertainty owing to the conflict.

Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, warned of the consequences of interrupted supply chains, increased inflation, and considerable impact on the world’s poor.

“The Ukraine war caused enormous human misery, but it also harmed the global economy at a vital moment. Its effects will be felt throughout the world, particularly in low-income nations where food goods account for a major share of family expenses.”

The outlook for the global economy has darkened since the war in Ukraine began on February 24, the WTO notes. The most immediate economic impact of the crisis has been a sharp rise in commodity prices. Despite their small stakes in world trade and production, Russia and Ukraine are major suppliers of essential commodities, including food, energy and fertilizer, whose supply is now threatened by war.

Grain shipments through Black Sea ports have already been halted, with potentially disastrous consequences for food security in developing countries.

Most economists feel that China, the world’s second-biggest economy, poses the most imminent threat to the global economy. According to the WTO, conflict is not the only issue weighing on international trade. It also mentions that China’s lockdowns to fight the covid-19 pandemic are hurting maritime commerce at a time when supply chain tensions appeared to be easing.

According to WTO projections, world GDP at the market exchange rate is expected to grow 2.8% this year after expanding 5.7% last year. Next year, production growth could increase to 3.2% if geopolitical and economic uncertainties persist.

In 2022, Russia’s sphere of influence is anticipated to have a 12% decrease in imports and a 7.9% decrease in GDP. Still, its exports could increase by 4.9% due to the dependence of other countries on Russian energy.

World trade of goods increased in volume by 9.8% in 2021. The monetary amount of international commerce grew by 26% to $22.4 trillion. It indicates that, on average, export and import prices increased by 15% last year. The dollar’s purchasing power rose by 59% for fuels and ming products, 19% for agricultural products, and 21% for manufactured goods.

This year, with the war in Ukraine, the price of oil (Brent) rose 38% until March, compared to January, and 81% in a year. On the other hand, gas prices increased by 45% between January and March.

Source: Valor Econômico

To read the full original article, please go to:

https://valor.globo.com/mundo/noticia/2022/04/12/omc-revisa-para-baixo-comrcio-at-2023-e-alerta-sobre-china.ghtml

Sharing is caring!