The World Trade Organization on Wednesday dramatically lowered its global trade forecast for 2023, as Russia’s war in Ukraine and other shocks take their toll on the world economy.

“Today the global economy faces multi-prong crises. Monetary tightening is weighing on growth across much of the world,” WTO Director-General Ngozi Okonjo-Iweala told reporters in Geneva.

Presenting a revision of their annual trade forecast, WTO economists said they still anticipate global economic growth to rise by 2.8 percent this year, in line with their expectations in April.

But they said that for 2023, GDP growth is now expected to be just 2.3 percent, down from the previous forecast of 3.2 percent.

By way of comparison, the Organisation for Economic Co-operation and Development, which has maintained its 2022 forecast at three percent, expects 2.2 percent growth next year.

The International Monetary Fund forecasts growth at 3.2 percent this year and 2.9 percent in 2023.

As for global merchandise trade, WTO economists said they now expect its volume to grow 3.5 percent this year, which is slightly higher than previously expected.

They then expect the volume to grow by only one percent in 2023 — dramatically down from the 3.4 percent forecast in April.

“The picture for 2023 has darkened considerably,” Okonjo-Iweala said.

The WTO said surging energy prices in Europe, stemming from the war in Ukraine, were expected to squeeze household spending and raise manufacturing costs on the continent.

Meanwhile monetary policy tightening in the United States was hitting the housing, motor vehicle and fixed investment sectors, and China was still grappling with Covid-19 outbreaks and production disruptions.

Furthermore, the growing import bills for fuel, food and fertiliser risked leading to more food insecurity and debt distress in developing countries, the WTO said.

If its forecasts pan out, world trade will slow considerably next year, but will still continue to grow.

The global trade body stressed the vast uncertainty surrounding the forecasts, due to “shifting monetary policy in advanced economies and the unpredictable nature of the Russia-Ukraine war.”

If the situation deteriorates, the WTO warned that trade growth next year could be as low as minus 2.8 percent, but it emphasised that if things shift in a more positive direction, it could be as high as 4.6 percent.

Last week, Okonjo-Iweala warned that Russia’s war in Ukraine, the climate crisis, food price and energy shocks plus the aftermath of the Covid-19 pandemic were creating the conditions for a world recession.

“Now we have to weather what looks like an oncoming recession,” she told the opening of the WTO’s annual public forum in Geneva.