WTO Forecasts Moderate Trade Recovery Amid Geopolitical Tensions

The World Trade Organization predicts a 2.6% growth in world merchandise trade volume in 2024 and 3.3% in 2025. Despite challenges in 2023, the WTO anticipates an economic boost from rising incomes and manufacturing demands, although geopolitical tensions and protectionism pose significant risks.

The World Trade Organization (WTO) has released a report projecting a gradual recovery in world merchandise trade. Trade volume is expected to grow by 2.6% in 2024 and 3.3% in 2025, following a 1.2% decline in 2023. This positive outlook is attributed to the anticipated decline in inflation, which is set to bolster real incomes and subsequently increase the consumption of manufactured goods in advanced economies.

Despite these optimistic projections, the WTO warns of significant downside risks. Geopolitical tensions, particularly in the Middle East, have disrupted sea shipments between Europe and Asia, with potential trade fragmentation looming due to conflicts elsewhere. The rising trend towards protectionism could further undermine trade recovery in the coming years.

In 2023, import demand remained weak across most regions, with notable exceptions in the Middle East and the Commonwealth of Independent States, where imports surged. The WTO report highlights that the global GDP growth rate has decelerated from 3.1% in 2022 to 2.7% in 2023. Nevertheless, trade has shown resilience, with a notable increase in commercial services and a 6.3% rise in merchandise trade volume since 2019.

(With inputs from agencies.)