As the global economy continues to face strong headwinds and multiple shocks, the World Trade Organization said global trade is expected to lose momentum in the second half of 2022 and remain subdued in 2023.
WTO economists predict global merchandise trade volumes will grow by 3.5 percent in 2022 — slightly better than the 3.0 percent forecast in April.
But for the coming year, they foresee a 1 percent increase — down sharply from the previous estimate of 3.4 percent.
Further, the WTO said import demand is expected to soften as growth slows in major economies for different reasons.
In Europe, high energy prices stemming from the Russia-Ukraine war will squeeze household spending and raise manufacturing costs.
Tighter monetary policy
In the United States, monetary policy tightening will hit interest-sensitive spending in areas such as housing, motor vehicles, and fixed investment. China continues to grapple with Covid-19 outbreaks and production disruptions paired with weak external demand. Finally, growing import bills for fuels, food, and fertilizers could lead to food insecurity and debt distress in developing countries.
“Policymakers are confronted with unenviable choices as they try to find an optimal balance among tackling inflation, maintaining full employment, and advancing important policy goals such as transitioning to clean energy. Trade is a vital tool for enhancing the global supply of goods and services, as well as for lowering the cost of getting to net-zero carbon emissions,” WTO director-general Ngozi Okonjo-Iweala said.
She added that while trade restrictions may be a tempting response to the supply vulnerabilities that have been exposed by the shocks of the past two years, a retrenchment of global supply chains would only deepen inflationary pressures, leading to slower economic growth and reduced living standards over time.
“What we need is a deeper, more diversified, and less concentrated base for producing goods and services. In addition to boosting economic growth, this would contribute to supply resilience and long-term price stability by mitigating exposure to extreme weather events and other localized disruptions. The success of the WTO’s 12th Ministerial Conference (MC12) in June is proof that with sufficient political will, members can cooperate and move forward together,” she added.
Resilient to shocks
Reacting to this, Board of Investments chief, Trade Undersecretary Ceferino Rodolfo said as the country will always be affected by global developments, the Philippines remains resilient to all types of shocks.
“We are banking on the resilience of exporters that they have exhibited during this pandemic and post-pandemic. If we recall, we have surpassed the pre-pandemic levels in 2022 and even in 2021, primarily in the electronics sector and food sector. Hopefully, they will remain not too sensitive when it comes to global downturns. We also hope that despite the projection, we will still be working with the exporting sector so we could sustain the total recovery of the said sector,” Rodolfo told reporters.
Trade Secretary Fred Pascual also said the government continues to see encouraging indications of economic recovery, following the growth of the economy in the second quarter growth of 7.4 percent, marking the fifth consecutive quarterly growth since the start of 2021.