World trade will continue to experience a notable slowdown during this 2023, according to the recent statements of Ngozi Okonjo-Iweala, director general of the World Trade Organization (WTO), who will even remain attached to the projection of 1% with respect to the growth of trade at the international level.
The ravages caused by the pandemic and the war between Russia and Ukraine have had negative effects on the growth of the economy and although much of the logistics sector has managed to overcome many of the obstacles efficiently, the economy in general will continue to be affected in the coming months.
During the month of October last year the WTO had predicted an increase of 1%, which represents a drastic change in the projections with respect to the previous estimates of 3.4%, but what exactly are the factors that would have the greatest impact on this slowdown?
Factors affecting world trade in 2023
As reported by the WTO, world trade will suffer a sharp slowdown during 2023 due to a series of factors to take into account, here are some of these:
High electricity prices and inflation
High energy prices in Europe in the wake of the war between Russia and Ukraine have been a key factor in the slowdown, in turn increasing the costs of manufacturing and transporting raw materials.
The renewed monetary policy by the United States
The monetary policy imposed by the United States is another factor that will continue to cause the slowdown in world trade when it comes to using interest rates, buying a home, acquiring a new vehicle, or making other types of fixed investments.
The new health crisis facing China as a result of Covid-19
The growing crisis that China is experiencing, again after the resurgence of Covid-19 cases, will undoubtedly cause serious havoc in the global economy, especially due to the reduction of personnel in the assembly lines of products and transportation to other countries.
Rising food and fertilizer prices
The aforementioned armed conflict, added to the container crisis and the problems caused in supply chains due to Covid-19 in China, continue to increase the price of basic resources such as food with an increase of 11%, cereals by 15% and fertilizers by 60%. The rise is especially worrying in fertilizers, since they are absolutely necessary to ensure the fulfillment of food demand around the world.
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Sources:
DAVOS-The WTO maintains a 1% projection for world trade growth. Euronews
Global trade growth in 2023 will slow sharply. United Nations
