WTO sees signs of trade revival, but risks from fragmentation

livemint.com:

World trade is set to rebound this year and next as cooling inflation eases pressure on household budgets, according to the World Trade Organization, but the recovery may be weakened by growing distrust and fresh barriers between some large economies. Flows of goods and services across national borders have swung wildly over recent years in response to the Covid-19 pandemic and the subsequent lifting of related restrictions. While trade in goods soared in 2021 and 2022 as households in lockdown were deprived of access to many services, last year saw a decline of 1.2%.

As recently as October, the WTO had expected to see growth of 0.8%. Declines in trade volumes are relatively rare, and usually accompany big setbacks to the global economy, as with the onset of the pandemic in 2020 and the fallout from the global financial crisis in 2009. The decline in trade during 2023 was largely driven by Europe, where a surge in energy and food prices hit household spending on other goods.

But with inflation rates easing and household spending power in repair, the WTO said global trade in goods is likely to increase by 2.6% this year and 3.3% next. There are some signs that trade in goods is on that path to recovery. Surveys of factories around the world in March recorded the joint smallest decline in new export orders in a sequence that stretches over 25 months.

However, the Geneva-based dispute resolution body warned that the recovery could be slowed or derailed if governments try to steer trade away from nations that they perceive to be hostile or untrustworthy. “We are making progress towards global trade recovery," said Ngozi Okonjo-Iweala, head of the WTO. “It’s imperative that we mitigate risks like geopolitical strife and trade