WTO trims world trade growth forecasts for 2016
The World Trade Organization (WTO) on Thursday trimmed its 2016 global trade growth forecast by 1.1 percentage points, saying a slowdown in China and broad market volatility continued to weigh on growth.
The multilateral trade body has now predicted that global trade would rise by 2.8% in 2016, lower than its previous forecast of a 3.9% expansion announced in September last year. This will be the fifth straight year of trade growth below 3%, which is also much lower than the average annual expansion of 5% since 1990, showed the WTO data.
“Risks to this forecast are mostly on the downside, including a sharper-than-expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements,” the trade body said. There is some upside potential if monetary support from the European Central Bank succeeds in generating faster growth in the euro area, it added.
The WTO has estimated global trade growth at 2.8% for 2015 as well. However, global trade could rise 3.6% in 2017, thanks to increased demand for imported goods in Asia, it said.
“Trade is still registering positive growth, albeit at a disappointing rate,” WTO director general Robert Azevedo said in a statement. The crash in global commodity prices has shown few signs of reversing, while the full extent of the slowdown in the world’s top commodity consumer, China, continues to remain uncertain. Azevedo has also warned about “the threat of creeping protectionism, as many countries continue to apply trade restrictions.”
“South America recorded the weakest import growth of any region in 2015 as a severe recession in Brazil depressed demand,” the WTO said. Exports of developed economies trailed those of developing countries in 2015, with 2.6% volume growth in the former and 3.3% in the latter. Imports by developed economies surged last year while those of developing countries stagnated, with growth of 4.5% in the former and 0.2% in the latter, it added. A sharp trade slowdown affected all regions in the second quarter of 2015 but was mostly reversed by the end of the year, the trade body said.