WTO slashes trade growth for 2015
The World Trade Organisation yesterday slashed its forecast for this year's global trade growth to 2.8 percent from its earlier prediction of 3.3 percent, making it the fourth consecutive year in which it will fall below 3 percent.
The reasons for the WTO's cutback on growth outlook are the fall in imports in China, Brazil and other emerging economies, declining prices of oil and other primary commodities, and significant exchange rate fluctuations.
Furthermore, 2015 will mark the fourth consecutive year in which trade will have grown at roughly the same rate as world GDP, rather than twice as fast, as was the case in the 1990s and early 2000s.
“Trade can act as a catalyst for economic growth. At a time of great uncertainty, increased trade could help reinvigorate the global economy and lift prospects for development and poverty alleviation,” said Roberto Azevedo, director general of the WTO. The strongest downward revision to the previous export forecast for 2015 was applied to Asia, where the estimate was lowered to 3.1 percent from 5 percent in April.
This is mostly due to falling intra-regional trade as China's economy has slowed, the WTO said.
The downward revision to Asia on the import side was even stronger, from 5.1 percent to 2.6 percent, partly due to lower Chinese imports, which were down 2.2 percent year-on-year in the second quarter.
The product composition of China's merchandise imports suggests that some of the slowdown may be related to the country's ongoing transition from investment- to consumption-led growth.
The quarterly export growth of developed economies was essentially flat in the first two quarters of 2015, but those of developing countries were more negative at 1.9 percent.
The drop in exports was driven by weaker developing countries' imports and stagnation in developed countries' imports.
The WTO also lowered its trade growth forecasts for 2016 to 3.9 percent from its April prediction of 4 percent.
Volatility in financial markets, uncertainty over the changing stance of monetary policy in the US and mixed recent economic data have clouded the outlook for the world economy and trade in the second half of the year and beyond, the WTO said.
WTO members can help set trade growth on a more robust trajectory by seizing the initiative on a number of fronts, notably by negotiating concrete outcomes at the December Ministerial Conference in Nairobi, Azevedo added.
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