The World Trade Organization (WTO) has reduced its prediction for global trade volume growth from 3.4% to 1%, citing rising downside risks, which might have a significant impact on India's product exports in 2019. According to the Geneva-based multinational organization, several shocks to the global economy may cause world commerce to slow down in the second half of 2022 and stay muted in 2023.
"Trade growth will slow down significantly but remain positive in 2023 if the present prediction comes true. It should be highlighted that the prediction carries a significant level of uncertainty because of the advanced nations' changing monetary policies and the unpredictable character of the Russia-Ukraine war, it continued.
The WTO did, however, increase its projection of the growth of the global merchandise trade for 2022 from 3 to 3.5 %. According to WTO Director-General Ngozi Okonjo-Iweala, the prognosis for the world economy has become much more gloomy, raising serious concerns. "Every risk is a negative one. In the future, developing a more varied, less concentrated basis for manufacturing products and services would be a better response to the supply chain vulnerabilities highlighted by the previous two years, she added.
New WTO predictions state that the global economy would increase by 2.8% in 2022 and 2.3% in 2023, respectively, with the latter figure being 0.1% less than what was previously predicted. According to the WTO, there are a variety of interconnected hazards to the prediction. Major central banks have already begun to raise interest rates in an effort to control inflation, but going too far might lead to a recession in certain nations, which would have an adverse effect on imports. High-interest rates in developed economies might cause capital to leave emerging economies, disrupting financial flows throughout the world. The global economy might become unstable if the Russia-Ukraine conflict escalates, according to the report. It could also erode consumer and corporate confidence.
The WTO said that the decoupling of large economies from international supply networks was an overlooked risk. This would make supply constraints worse in the short term and lower productivity over time.
Trade growth in 2023 might be as low as -2.8% if the adverse risks come to pass. "However, if the surprises are positive, trade growth might reach 4.6% in the upcoming year. If any of the underlying assumptions change, the trade might also end outside of these limitations, it continued.
For the first time in 19 months, India's exports of goods fell by 3.5% in September. Disaggregated data up to August indicated that shipments to China, Bangladesh, Hong Kong, Italy, and Japan, among India's top export destinations, decreased in both July and August, but exports to the UK, Germany, and Saudi Arabia only began to decline in August.
Invoking persisting global headwinds, the commerce ministry this week delayed the release of the eagerly anticipated foreign trade strategy and prolonged the current policy by an additional six months.
According to the global trade organization, import demand is anticipated to decline as major economies' development slows for a variety of reasons. "High energy costs brought on by the Russia-Ukraine conflict will reduce family expenditure and increase manufacturing expenses in Europe. The tightening of monetary policy in the US will affect interest-sensitive expenditures on things like houses, cars, and fixed investments. In addition to decreased foreign demand, China is still struggling with Covid-19 outbreaks and manufacturing interruptions, it continued.
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