WTO economists say the volume of world merchandise trade has been weighed down by the effects of the conflict in Ukraine, high inflation, tighter monetary policy, and financial market uncertainty.

The global GDP at market exchange rates is forecast to grow 2.4% in 2023 but projections for trade and GDP growth this year are below the average for the past decade, 2.7%, due to the production and trade disruption in China, the world’s second biggest economy.

But the forecast for this year’s trade growth is up from the previous estimate of 1%. China's adjustment of its COVID-19 measures is a key factor in this increase, the report said, adding that the reopening of China is expected to boost international trade.

Ralph Ossa, WTO Chief Economist, said the lingering effects of COVID-19 and rising geopolitical tensions are the main factors impacting trade and output in 2022, and this is likely to be the case in 2023, as well.

Interest rate hikes in advanced economies have revealed weaknesses in banking systems that could lead to wider financial instability if left unchecked, he said. He underscored the need for governments and regulators to be alert to these and other financial risks in the coming months.

Trade continues to lend resilience to the global economy, but it will remain under pressure from external factors in 2023. This makes it even more important for governments to avoid trade fragmentation and refrain from introducing obstacles to trade, WTO Director-General Ngozi Okonjo-Iweala said.

Investing in multilateral trade cooperation, as WTO members did at the12th Ministerial Conference last June, will bolster economic growth and people's living standards over the long term, she said. According to the report, global trade growth should rebound to 3.2% in 2024, as global GDP growth picks up to 2.6%.