WTO economists said in the statement that global merchandise trade volumes will grow by 3.5 percent in 2022 -- slightly better than the 3.0 percent forecast in April. However, for 2023 they foresee a 1.0 percent increase, down sharply from the previous estimate of 3.4 percent.
The new WTO forecast estimates world gross domestic product (GDP) at market exchange rates will grow by 2.8 percent in 2022 and 2.3 percent in 2023 - the latter is 1.0 percentage points lower than previous projections.
In their April forecast, WTO economists had to rely on simulations to generate reasonable growth assumptions, since at the Ukraine conflict had only just begun and its impact remained unknown.
However, WTO economists said on Wednesday that the April estimates for 2023 now appear overly optimistic. Since then, energy prices have skyrocketed, inflation has become more broad-based, and the conflict is still showing no sign of letting up.
The economists explained that import demand is expected to soften, as growth slows in major economies for various reasons.
High energy prices stemming from the Russia-Ukraine conflict will squeeze household spending and raise manufacturing costs in Europe; the tightening of monetary policy will hit interest-sensitive spending in areas such as housing, motor vehicles and fixed investment in the United States.
Growing import bills for fuels, food and fertilizers could lead to food insecurity and debt distress in developing countries.
"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," WTO Director-General Ngozi Okonjo-Iweala said.
"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," she said.
"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," she noted.
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