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WTO Raises Trade Growth Estimate for 2014 and 2015

Tuesday, April 15, 2014
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization announced April 14 that world trade is now expected to grow by 4.7% this year, up from the 4.5% estimated last fall, and 5.3% in 2015. Over the past two years global commerce has grown an average of 2.2% annually, well below the 5.3% average of the past two decades and roughly the same rate as world production, rather than twice as fast as has normally been the case since the 1990s. The WTO speculates that “in addition to creating a permanent shift downward in the level of trade, the global recession of 2008-2009 may have reduced its average growth rate as well.”

The WTO attributes the sluggishness of trade growth in 2013 to a combination of flat import demand (-0.2%) in developed economies and moderate import growth (4.4%) in developing economies. On the export side, growth was 1.5% for developed economies and 3.3% for developing economies. Factors contributing to these relatively low figures include the “lingering impact of the EU recession, high unemployment in euro area economies (Germany being a notable exception), and uncertainty about the timing of the Federal Reserve’s winding down of its monetary stimulus in the United States.”

Looking ahead, the WTO finds that prospects for world trade and output in 2014 and 2015 “are better than they have been for some time, largely due to economic improvements in the U.S. and EU. At the same time, leading economies remain fragile, “including some of the most dynamic developing countries that until recently were propping up global demand,” and developing economies have slowed appreciably for a variety of reasons both internal and external. “Which of these forces is stronger,” the WTO concludes, “may determine how world trade evolves over the next 1 to 2 years.”

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