Higher interest rates and sharply increased prices for energy and fertilizers will have a major impact on world trade next year. According to the World Trade Organization (WTO), global imports and exports will increase much less rapidly in 2023 than previously estimated.
The WTO now assumes that world trade will increase by 1 percent in 2023 compared to this year. That is much less than the 3.4 percent growth the organization forecasted in April. Instead, world trade is expected to grow by 3.5 percent this year.
The Russian invasion of Ukraine has made Europe’s natural gas and electricity much more expensive. As a result, households will spend less and industrial companies will also have much higher costs, inhibiting trade between countries. Furthermore, interest rate increases in the United States, among others, will lead to lower investments in real estate, machines and cars, according to the WTO. In addition, fertilizers have become more expensive, leading to financial distress in developing countries.
WTO Director-General Ngozi Okonjo-Iweala called on countries not to avert crises with trade barriers to protect domestic companies. “Cutting down global supply chains will only exacerbate inflationary pressures, leading to slower economic growth and lower living standards over time.”
The WTO warned at the end of September that the world economy was sliding into recession. The institution also points to the strict lockdowns that China is introducing in the event of coronavirus outbreaks. These shut down a large part of public life and often disrupt production processes.