Global trade projected to grow at 1.7% in 2023

The World Trade Organization (WTO) has released its statistical report for 2023, projecting global trade to grow by approximately 1.7 per cent. Despite facing significant headwinds, the outlook for international trade seems promising. In a recent interview with CNBC Africa, WTO Chief Economist Ralph Ossa shed light on the factors impacting global trade. One of the key drivers for the projected growth in 2023 is the expected recovery from the slump seen in the fourth quarter of 2022, exacerbated by monetary tightening worldwide and the COVID-19 situation in China. Ossa pointed out that the COVID outbreak in China towards the end of 2022 had a substantial negative impact on trade. However, with the situation under control, China is poised to play a crucial role in boosting international trade in 2023, especially in the services sector, including travel and transportation, now that COVID restrictions have eased. The WTO Chief Economist also highlighted the importance of keeping trade open and supporting the multilateral trading system to ensure economic security and stability. Ossa expressed concerns about two significant headwinds affecting trade prospects - monetary tightening and financial instability, coupled with geopolitical tensions. He emphasized the need for governments to monitor financial markets closely, particularly the banking sector, as trade finance is heavily dependent on banking stability. Ongoing multilateral trade agreements, such as the African Continental Free Trade Area (AFCFTA), aim to bolster regional trade growth. Ossa underscored the importance of boosting intra-African trade, as the continent trades more with other continents than within itself. Despite concerns about fragmentation and de-globalization, Ossa urged African governments to capitalize on the AFCFTA and continue supporting the multilateral trading system governed by the WTO, responsible for 75% of global trade. Looking ahead to commodity prices in 2024, Ossa refrained from making specific predictions but mentioned that the WTO's forecast assumes commodity prices will stabilize at their long-run value. As the world grapples with the Ukraine-Russia war and other uncertainties, Ossa cautioned that geopolitical developments and monetary policies could significantly impact trade outcomes in 2024. The WTO's optimistic projections for 2024 are predicated on a slightly more positive outlook for GDP growth. However, Ossa stressed the unusually high level of uncertainty surrounding these projections due to geopolitical and policy fluctuations. In conclusion, Ossa highlighted the importance of resilience in the face of ongoing shocks, recommending that African governments prioritize a strong multilateral trading system to enhance their external options and withstand future crises.