The World Trade Organization has revised its 2016 global trade forecast downward by more than one percentage point. It said broad market volatility and a slowdown in China would no doubt take their toll.
Global trade would expand by only 2.8% this year, WTO officials said Thursday as they presented their latest twice-yearly forecast in Geneva, Switzerland, DW reported.
The new figure marked a substantial downward revision from the 3.9% trade expansion the world body had predicted in September of last year.
"Business and consumer confidence has slipped recently in developed countries, the WTO stated, citing slowing growth in w-estern nations and a bigger market volatility as two core reasons for the lowered forecast.
Asia: A Beacon of Hope
"This will be the fifth consecutive year of trade growth below 3%," WTO Director Roberto Azevedo warned in a statement.
While trade growth measured the overall volume of exports and imports, the actual value of the worldwide exchange of goods had been falling because of negative currency conversion effects and dropping commodity prices, the WTO said.
At 3.4%, Asia is expected to be the region with the fastest-growing export volumes this year, followed by Europe and North America with 3.1% each.
By contrast, Latin American exports are projected to lag behind at just 1.9%. For 2017, the WTO forecast the pace of global trade growth to speed up to 3.6%.
Unusual Patterns
“Such a long, uninterrupted spell of slow but positive trade growth is unprecedented,” WTO economists wrote.
Thursday’s forecast marks the first time in recent years that the WTO has not predicted a bounce in global trade. It is also emblematic of broader anxieties about the global economy with the International Monetary Fund widely expected to downgrade its own 3.4% forecast for global growth next week when central bankers and finance ministers from around the world gather in Washington for the spring meetings of the IMF and World Bank.
To many economists the unusual patterns in international trade seen in recent years are just one example of how traditional economic relationships have been tested or broken since the 2008 global financial crisis.
For most of the past three decades, world trade has grown at twice the rate of global GDP as globalization has accelerated thanks to the emergence of major players such as China and other factors like the plummeting cost of transporting goods.
The WTO said that by its calculations the value of world trade in current dollar terms last year fell by 13% to $16.5 trillion from $19 trillion in 2014.
Demand Collapses
According to Robert Koopman, the WTO’s chief economist, part of the problem in global trade in recent years has been a rotating series of crises that has seen demand collapse in a succession of different regions.
Asian economies, for example, have helped prop up global trade since the 2008 crisis. But last year as China’s economy cooled its contribution fell markedly. According to the WTO, in 2013 Asia contributed 1.6 percentage points of the 2.3% rise in the volume of global merchandise imports, or almost three-quarters of the growth. In 2015 the region contributed just 0.6 percentage points to the global increase of 2.6%, or less than a quarter.
Meanwhile, Europe, which reduced global import demand growth by 0.1 percentage points in 2013 accounted for 1.5 percentage points of the 2.6% increase in world import volumes last year, or almost 60%.
Azevedo said the recovery in trade was being hurt in part by a “creeping protectionism” as countries slowly erected new trade barriers.
But those protectionist barriers remain far less significant than ones set up in the wake of previous crises and Koopman said the biggest factor in the slowdown was the stagnant demand around the world exacerbated by the slow return of investment.
