According to the report, global trade growth should rebound to 3.2 percent in 2024 as global GDP growth picks up to 2.6 percent.

This aerial photo shows a cargo ship departing from the Yantai Port in Yantai, east China's Shandong Province, on January 9, 2023. (Photo/Tang Ke, Xinhua)

Geneva - Global trade growth in 2023 will slow to 1.7 percent, the World Trade Organization (WTO) said in its annual trade statistics and outlook report, published on Wednesday.

The report said that the effects of the conflict in Ukraine, high inflation, tighter monetary policy, and financial market uncertainty had weighed down the volume of the world merchandise trade.

However, the forecast for trade growth in 2023 is up from last October's previous estimate of 1.0 percent. China's adjustment of its COVID-19 measures is a "key factor" in this increase, the report said. The report noted that the reopening of China is expected to boost international trade.

Dragged down by a sharp slump in the fourth quarter, world trade volume grew by 2.7 percent, "a smaller-than-expected increase."

This photo, taken on January 20, 2023, shows One World Trade Center displaying patterns for the Chinese Lunar New Year in New York, the United States. (Photo/Winston Zhou, Xinhua)

According to WTO economists, the global GDP at market exchange rates will grow 2.4 percent in 2023. Meanwhile, projections for trade and GDP growth in 2023 are below the averages for the past 12 years of 2.6 percent and 2.7 percent, respectively.

"The lingering effects of COVID-19 and the rising geopolitical tensions were the main factors impacting trade and output in 2022, and this is likely to be the case in 2023 as well," said Ralph Ossa, WTO Chief Economist.

He said that interest rate hikes in advanced economies have also revealed weaknesses in banking systems that could lead to broader financial instability if left unchecked.

"Governments and regulators need to be alert to these and other financial risks in the coming months," he added.

"Trade continues to be a force for resilience in the global economy, but it will remain under pressure from external factors in 2023. This makes it even more important for governments to avoid trade fragmentation and refrain from introducing obstacles to trade," WTO Director-General Ngozi Okonjo-Iweala said.

"Investing in multilateral cooperation on trade, as WTO members did at our Twelfth Ministerial Conference last June, would bolster economic growth and people's living standards over the long term," she stressed.

This aerial photo taken on March 13, 2023, shows a container terminal of Taicang Port, east China's Jiangsu Province. (Photo/Li Bo, Xinhua)

According to the report, global trade growth should rebound to 3.2 percent in 2024 as global GDP growth picks up to 2.6 percent.

The report added that the estimate is more uncertain than usual due to substantial downside risks, including geopolitical tensions, food supply shocks, and the possibility of unforeseen fallout from monetary tightening.