World Trade Organization Director-General Ngozi Okonjo-Iweala attends a news conference in Geneva, Switzerland, October 5, 2022.
Credit: Reuters File Photo
New Delhi: The global trade growth is expected to pick up gradually this year after a contraction in 2023 but regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks, according to a WTO forecast released on Wednesday.
The World Trade Organisation (WTO), however, lowered the trade growth projection for 2024 to 2.6 per cent.
In October last year, the organisation had projected that growth would be 3.3 per cent.
"Global goods trade is expected to pick up gradually this year following a contraction in 2023 that was driven by the lingering effects of high energy prices and inflation," the WTO said in a statement.
"It said the volume of world merchandise trade should increase 2.6 per cent in 2024 and 3.3 per cent in 2025 after falling 1.2 per cent in 2023. However, regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the forecast," it added.
The decline in merchandise exports in 2023 was partly due to falling prices for commodities, such as oil and gas.
"In 2024 and 2025, inflation is expected to gradually abate, allowing real incomes to grow again in advanced economies, boosting consumption of manufactured goods. A recovery of demand for tradeable goods in 2024 is already evident. This is related to an increase in household consumption linked to improved income prospects," it added.
It also said conflict in the Middle East has diverted sea shipments between Europe and Asia while tensions elsewhere could lead to trade fragmentation.
Rising protectionism is another risk that could undermine the recovery of trade in 2024 and 2025, the WTO said.
WTO Director-General 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," she concluded.