GENEVA (AP) — The World Trade Organization slightly raised its outlook for global trade in goods this year, but warned Thursday that growing geopolitical tensions and uncertainty over economic policy pose “substantial” risks to its forecasts.

The Geneva-based WTO forecasts that global merchandise trade will increase 2.7% this year, up from 2.6% forecast in April. But it forecasts growth of 3% next year, down from the 3.3% previously forecast. Last year, the volume of global merchandise trade fell by 1.1%, pushed down by high inflation and rising interest rates.

The global trade body warned that “rising geopolitical tensions and increased economic policy uncertainty continue to pose substantial downside risks to the forecast.”

It nevertheless points to a 2.3% year-on-year increase in global merchandise trade in the first six months of this year and notes that inflation fell enough by mid-year for central banks to begin cutting back. interest rates.

“We expect a gradual recovery in global trade for 2024, but we remain vigilant against possible setbacks, in particular the potential escalation of regional conflicts such as those in the Middle East,” said the director general of the OMC, Ngozi Okonjo-Iweala, in a press release. “The impact could be more severe for countries directly affected, but it could also indirectly affect global energy costs and shipping routes. »

The WTO said there was “some limited upside” to its forecasts if interest rate cuts in advanced economies fuel stronger-than-expected growth without reigniting inflation.