WTO Raises Alarm on Global Trade Slump

The World Trade Organization has revised its forecast for global merchandise trade, predicting a slight decline in 2023 due to U.S. tariffs and potential ripple effects. Concerns include economic fragmentation between China and the U.S. and a shift from 'rules-based' to 'deals-based' trade systems.

The World Trade Organization (WTO), in a recent forecast revision, announced a concerning decline in global merchandise trade growth, reducing its expectations from a 3.0% expansion to a 0.2% decline in 2023. The WTO attributes this shift largely to heightened U.S. tariffs and their adverse spillover effects.

Director General Ngozi Okonjo-Iweala expressed significant concern, given the potential consequences of trade deterioration on economic growth and financial markets. With President Trump's trade policies potentially causing a 1.5% drop in trade growth, fears are mounting about a deepening rift between major economies, particularly the U.S. and China.

This decoupling, if exacerbated, could fragment the global economy, reducing GDP by a substantial 7% in the long term. The WTO noted a pivot in trading systems towards more erratic, deal-based arrangements. Amidst global uncertainties, there remains a cautious outlook for eventual recovery in goods and services trade by 2025 and beyond.

(With inputs from agencies.)