Governments in emerging-market and developing economies (EMDEs) need to forge stronger cooperation to increase cross-border trade as global trade growth is expected to decelerate further this year, according to a report of the World Bank Group.
The Global Economic Prospects report said that after softening to 4 percent last year, global trade growth is seen to slow down to 1.6 percent in 2023, largely reflecting weakening global demand.
“Trade is envisaged to be particularly subdued in EMDEs with strong trade linkages to major economies where demand is expected to slow sharply. In all, the current post-recession rebound in global trade is on course to be among the weakest on record,” it said.
The report said travel and tourism are expected to pick up further but will be constrained by slower global activity and high input costs.
Goods trade is expected to moderate owing to subdued demand and a gradual shift in consumption toward services, it said.
“Weaker-than-expected global demand and renewed supply chain bottlenecks pose downside risks to the global trade outlook,” it added.
Citing earlier reports, the Global Economic Prospects report said an intensification in trade protectionism, fragmentation of trade networks, and security concerns about supply chains could increase trade costs and slow trade growth.
It said global trade growth decelerated in the second half of 2022, along with deteriorating activity in major economies.
“Weakening trade mirrored the slowdown in global industrial production, as demand shifted toward its pre-pandemic composition and away from goods,” it added.
The report said despite this moderation, goods trade surpassed pre-pandemic levels last year, services trade continued to recover, while tourism flows rebounded as many countries eased travel restrictions but remained well below pre-pandemic levels and uneven across regions.
As global trade growth slows, World Bank Group president David Malpass highlighted the importance of stronger cooperation to increase cross-border trade.
Malpass said greater efforts are needed to diversify products and markets, gain access to trade finance and strengthen trade facilitation through arrangements, such as customs agreements.
“Governments should reduce arbitrary barriers to both imports and exports alike. Protectionist measures including the latest wave of export bans on food and fertilizers should be shunned,” he said.