WTO warns trade growth to be ‘sluggish’ 2.8%

The World Trade Organization reported on Thursday that growth in the volume of world trade is expected to remain sluggish at 2.8% in 2016, unchanged from the 2.8% increase in 2015.

This would be the fifth consecutive year of trade growth below 3%.

Global trade growth should rise to 3.6% in 2017, WTO economists said.

“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,” said the WTO.

However, the WTO said there was some upside potential if monetary support from the European Central Bank succeeds in generating faster growth in the Euro area.

“Trade is still registering positive growth, albeit at a disappointing rate,” said WTO director-general Roberto Azevêdo.

“This will be the fifth consecutive year of trade growth below 3%.

“Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices.

“This could undermine fragile economic growth in vulnerable developing countries.

“There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow.”

Azevêdo said that the figures should be kept in perspective.

He said WTO members could take a number steps to use trade to lift global economic growth — from rolling back trade restrictive measures and implementing the WTO Trade Facilitation Agreement.

The Trade Facilitation Agreement, he said, would dramatically cut trade costs around the world, potentially boosting trade by up to $1 trillion a year.

“More can also be done to address remaining tariff and non-tariff barriers on exports of agricultural and manufactured goods,” Azevêdo added.

Thursday’s WTO report said that on the basis of the forecast for 2016, world trade will have grown at roughly the same rate as world GDP for five years (at market exchange rates), rather than twice as fast as was previously the case.

“Such a long, uninterrupted spell of slow but positive trade growth is unprecedented, but its importance should not be exaggerated,” the WTO said.

“Overall, trade growth was weaker between 1980 and 1985, when five out of six years were below 3%, including two years of outright contraction.”

In positive news, the WTO said container throughput at major ports had recovered much of the ground lost to the trade slowdown last year, while automobile sales — one of the best early signals of trade downturns — had continued to grow at a healthy pace in developed countries.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.