GENEVA (Reuters) – The World Trade Organization forecast a sharp slowdown of global goods trade growth next year as spiralling energy prices, rising interest rates and higher bills for food and fertiliser curb import demand.

The Geneva-based trade body said on Wednesday that merchandise trade would increase by 3.5% this year, up from its April estimate of 3.0%. However, for 2023, it sees trade growth of just 1.0%, compared with a previous forecast of 3.4%.

The WTO said there was high uncertainty over its forecasts. It provided a band of trade growth expansion of 2.0% to 4.9% for this year and of -2.8% to 4.6% for 2023.

WTO Director-General Ngozi Okonjo-Iweala warned against the “tempting response” to resort to trade restrictions to counter supply vulnerability.

“A retrenchment of global supply chains would only deepen inflationary pressures, leading to slower economic growth and reduced living standards over time,” she said in a statement.

She said what the world needed was a more diversified and less concentrated base for production of goods and services, which should boost growth, increase resilience and promote long-term price stability by mitigating exposure to extreme weather events and local disruption.

(Reporting by Philip Blenkinsop)