WTO forecast a downward trend in global trade growth

Context 

The world trade organization (WTO) has revised its early forecast for global trade growth for this year from 4.7% to 3% analyzing the impact of the Russia-Ukraine war and the pandemic. 

Key Points

• As per the WTO estimate, the global trade growth in 2023 would inch up to 3.4% which is less certain than usual due to uncertainty about the conflict.
• The double whammy of the ongoing Russia-Ukraine crisis and the restrictions due to the pandemic - Chinese lockdown specifically had damaged the world economy at a critical juncture.
• The supply chains got disrupted in this crisis situation which has increased the inflationary pressure and lowered the expectation for output and trade growth.
• WTO has also warned of a potential food crisis because of disruptions to export from Ukraine and Russia, both are the major supplier of grains and other commodities, that could hit poor countries, including 35 African countries, the hardest.
• WTO Director-General Ngozi Okonjo-Iweala urged the countries to remain committed to the multilateral trading system to stave off the risk of it splitting into two spheres.

About WTO

• WTO is an intergovernmental organization that came as a successor to the General Agreement on Tariffs and Trade(GATT) in Jan 1995,pursuant to the 1994 Marrakesh Agreement.
• GATT was created in 1947 in the wake of World War 2 to liberalize international trade.
• Later WTO superseded the GATT to regulate the global trade among the nations.
• The main objective of the organization is to ensure that trade flows as smoothly, predictably, and freely as possible through organizing and regulating trade barriers.
• WTO has had over 164  members since 29 July,2016 representing 98% of the world trade and global GDP.
• Its headquarter is in Geneva, Switzerland.
• The Ministerial Conference is the top decision-making body composed of all member states and the general council is there made up of representatives of all member states handled the day-to-day function.
• The annual budget of WTO is roughly 220 million USD which is contributed by members based on their proportion of international trade.