Global commerce is expected to grow by only 3.3 percent this year, the WTO said yesterday, slashing its previous forecast of 4 percent due to weak global economic growth and rising geopolitical tensions.
The WTO also said preliminary estimates showed trade expanded just 2.8 percent last year, missing September last year’s forecast of 3.1 percent.
“Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis,” WTO Director-General Roberto Azevedo said. “Looking forward, we expect trade to continue its slow recovery but with economic growth still fragile and continued geopolitical tensions, this trend could easily be undermined.”
Last year was the third consecutive year in which trade grew less than 3 percent.
“With geopolitical growth still fragile and geopolitical tensions ongoing we are cautiously forecasting that trade will continue its slow recovery,” Azevedo told reporters.
Trade growth is expected to pick up next year with an expansion of 4 percent, the WTO said.
Trade is a key measure of the health of the global economy which it both stimulates and reflects.
However, Azevedo said yesterday that a systemic shift might be underway and that trade expansion would no longer far outstrip overall economic growth as it had largely been doing for decades.
“The 2.8 percent rise in world trade in 2014 barely exceeded the increase in world GDP for the year, and forecasts for trade growth in 2015 and 2016 only surpass expected output growth by a small margin,” the WTO said.
Azevedo said that this year’s forecast was based on an assumption that global GDP would expand by nearly 3 percent, while next year’s forecast depended on economic growth reaching more than 3 percent.
A year ago, the WTO was singing a different tune. In April last year, it forecast that trade would expand 4.6 percent last year, and 5.8 percent this year. However, it downgraded those predictions in September last year.
“Conflict in the Middle East also stoked regional instability, as did an outbreak of Ebola haemorrhagic fever in west Africa,” the WTO said yesterday, also citing the impacts of unusually harsh winter weather in the US, collapsing world oil prices and strong exchange rate fluctuations.
“All of these things have effects, sometimes destabilizing effects,” Azevedo said. “For trade growth it is important that you have certain elements present in the global economy. One of them is stability, predictability, and those things are not there right now.”
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