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WTO Lowers Trade Growth Estimate for 2013 and 2014

Friday, September 20, 2013
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization announced Sept. 19 that its economists are now forecasting global trade growth of 2.5% in 2013, down from the 3.3% they projected in April, and 4.5% in 2014, down from 5.0%. Both would still be better than 2012, which saw trade growth fall to 2.0% from 5.2% in 2011. According to the WTO, the revised figures reflect that import demand in developing economies is reviving at a slower rate than expected. On the other hand, data from Europe, the U.S., Japan and China suggest that the economic slowdown has bottomed out and that a tentative recovery is underway.

The WTO states that the volume of world merchandise trade (i.e., goods trade adjusted to account for changes in prices, exchange rates and seasonal variation) was only up 1.2% in the first half of 2013 compared to the same period in 2012. For the forecast of 2.5% annual growth to be realized would require a 3.8% year-on-year increase in the second half of 2013, “which is feasible.” Some of the demand to fuel this growth would come from increased imports in developed economies, which dropped 1.6% in the first six months of 2013 and would require a 1.4% rise in the second half just to achieve 0% growth for the year. Whether this happens, the WTO notes, will depend mostly on the pace of recovery in the European Union.

The report finds that one of the few bright spots has been the resilience of developing economies’ imports, which were up 5.8% year-on-year in the first half of 2013 and have risen roughly 12% in the last two years.

The WTO anticipates that in 2014 developed economy exports will climb 2.8% and imports will grow 3.2%. For developing countries, exports are projected to rise by 6.3% and imports should expand by 6.2%.

Earlier this year the WTO speculated that “the fundamental growth rate of world trade volumes” has fallen, noting that a return to the pre-economic crisis average of 6.0% “would require a period of very rapid trade expansion” that “does not appear likely any time soon.”

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