The global economy is on the decline, according to the latest numbers from the World Trade Organization (WTO). Recent international trade statistics show that momentum is slowing with an expected increase of just 1.0 percent in 2023, down from the previous forecast of 3.4 percent.

As many countries enter a recession in 2023, demand for imports is also expected to slow down. This, paired with high-energy prices resulting from the Russian-Ukraine war, is expected to drive higher energy prices, driving up the cost of fuel, food and fertilizer. 

WTO director-general Ngozi Okonjo-Iweala said, “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.”

The new WTO forecast estimates world GDP at market exchange rates will grow by 2.8 percent in 2022 and 2.3 percent in 2023. 

“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,” he said. 

“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.”

If current forecasts remain on track, the WTO predicts trade will slow entering 2023 with trade growth slowing to between 2.0 percent and 4.9 percent. If trade remains lower than expected, then growth may drop to -2.8 percent. 

As the war continues, energy prices will rise as much as 36 percent. This is on top of the already 250 percent increase year over year. Natural gas has risen 350 percent in Europe year over year, while in the U.S. prices have risen 120 percent. 

This increase is driving concern of food security, particularly among low-income households. Grain prices have risen 15 percent year over year, with wheat alone rising 18 percent. Experts remain concerned about the rising cost of fertilizer which has tripled in price since 2020. This could lead to a reduction in crop yields and drive increased food insecurity.