WTO slashes global growth forecast for 2015
Sluggish economies and global conflicts are taking their toll on world commerce, the Geneva-based World Trade Organization said on Tuesday as it slashed its trade growth outlook for 2015.
"For trade growth it is important that you have certain elements present in the global economy (including) stability, predictability, and those things are not there right now," WTO chief Roberto Azevedo told reporters in Geneva.
With economies around the world still struggling to fully recover from the 2008 financial crisis, and with conflicts flaring in places like Ukraine and the Middle East, global trade is expanding far more slowly than anticipated a year ago.
The Ebola outbreak in west Africa, unusually harsh winter weather in the United States and collapsing world oil prices are also taking their toll, as are strong exchange rate fluctuations, Azevedo said.
"All of these things have effects, sometimes destabilising effects," Azevedo said.
On Tuesday, WTO said preliminary estimates showed global trade had expanded just 2.8 percent last year and was expected to swell only 3.3 percent this year.
A year ago, the WTO was singing a different tune.
Last April, it had forecast that trade would expand 4.6 percent in 2014 and 5.8 percent this year.
But it downgraded those predictions in September, to 3.1 percent and four percent respectively, before slashing them further on Tuesday.
"Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis," 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," he warned.
Last year was the third consecutive year in which trade grew less than three percent, WTO said in a statement.
In fact, trade growth averaged just 2.4 percent between 2012 and 2014 — the slowest rate on record for a three-year period when trade was expanding.
Trade growth is expected to pick up in 2016 with an expansion of four percent, it said, warning though that going forward, trade growth looks set to remain well below the annual average of 5.1 percent seen since 1990.
"We are cautiously forecasting that trade will continue its slow recovery," Azevedo told reporters.
WTO acknowledged though that "risks to the trade forecasts are mostly on the downside."
Trade is a key measure of the health of the global economy, which it both stimulates and reflects.
But Azevedo warned Tuesday that a systemic shift might be under way and that trade expansion would no longer far outstrip overall economic growth as it has largely done for decades.
"The rough two-to-one relationship that prevailed for many years between world trade growth and world GDP growth appears to have broken down," WTO said.
The organization noted that "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."
Azevedo said that the 2015 forecast was based on an assumption that global GDP would expand by nearly three percent, while the 2016 forecast depended on economic growth reaching over three percent.
The International Monetary Fund announced later Tuesday that it expects to see global growth at a tepid 3.5 percent this year, and 3.8 percent next year.
WTO meanwhile said developing countries were expected to see exports rise 3.6 percent this year, while their imports were set to jump 3.7 percent.
In developed countries, exports and imports were set to rise just 3.2 percent, it said.
Asia was expected to have the strongest export rise at five percent, followed by North America at 4.5 percent.
The weakest export growth this year is predicted to come in South America with just 0.2 percent.