GENEVA -- The World Trade Organization raised its outlook for global goods trade this year slightly, but cautioned Thursday that increasing geopolitical tensions and uncertainty over economy policy pose 鈥渟ubstantial鈥� risks to its forecast.
The Geneva-based WTO projected that global goods trade will increase by 2.7 per cent this year, compared with the 2.6 per cent it forecast in April. But it predicted growth of three per cent next year, down from the 3.3 per cent it forecast previously. Last year, the volume of world merchandise trade was down 1.1 per cent, pushed lower by high inflation and rising interest rates.
The global trade body cautioned that 鈥渞ising geopolitical tensions and increased economic policy uncertainty continue to pose substantial downside risks to the forecast.鈥�
Still, it pointed to a 2.3 per cent year-on-year increase in global merchandise trade in this year's first six months and noted that inflation had fallen far enough by mid-year for central banks to start cutting interest rates.
鈥淲e are expecting a gradual recovery in global trade for 2024, but we remain vigilant of potential setbacks, particularly the potential escalation of regional conflicts like those in the Middle East,鈥� WTO Director-General Ngozi Okonjo-Iweala said in a statement. 鈥淭he impact could be most severe for the countries directly involved, but they may also indirectly affect global energy costs and shipping routes.鈥�
The WTO said there is 鈥渟ome limited upside potential鈥� to its forecast if interest rate cuts in advanced economies fuel stronger-than-expected growth without reigniting inflation.
