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Indonesian factories to feel trade slowdown in 2023
‘The picture for 2023 has darkened considerably’ says the World Trade Organization, slashing its global growth forecast and not ruling out a sharp worldwide contraction.
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A worker operates a crane at the Perawang container port in Siak, Riau, on Aug. 7, 2020. (Antara/FB Anggoro)
T
he World Trade Organization expects significant headwinds for global trade next year, and Indonesian producers will not go unscathed.
In a press conference on Wednesday, WTO director general Ngozi Okonjo-Iweala said global merchandise trade volume was estimated to grow by just 1 percent in 2023, greatly reduced from the 3.4 percent assumption made in April.
Real global GDP growth is projected to increase by 2.3 percent next year, down 1 percentage point from the previous estimate, with a downside risk for a sharp contraction of 2.8 percent.
“The picture for 2023 has darkened considerably,” the WTO chief said. The institution’s downside scenario is based on risks such as a potential escalation of the war in Ukraine or a food or energy crisis.
Import demand from major economies in Europe will decrease as high energy prices weigh on households and increase production costs for industries, while rising interest rates in the United States will curb spending on housing, vehicles and fixed investment, according to the WTO.
In China, meanwhile, ongoing COVID-19 restrictions are expected to further hurt production volumes that are already impacted by weakening overseas demand.
Nonetheless, the WTO expects real GDP growth in Asia to be 4.2 percent, beating all other regions assessed, while Asian imports and exports are estimated to grow by 2.2 percent and 1.1 percent, respectively.
