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Global Trade Growth Forecast Slides Again Amid Weak Recovery, Geopolitical Tensions

Thursday, April 16, 2015
Sandler, Travis & Rosenberg Trade Report

World Trade Organization economists have again downgraded their forecast for world trade growth in the coming years amid uneven economic recoveries and continuing geopolitical tensions. At the same time, the WTO noted that the slowing trend of recent years does not rule out a return to faster growth at a later date. WTO Director-General Roberto Azevedo called on member countries to respond by withdrawing protectionist measures, improving market access, avoiding policies that distort competition and striving to agree on reforms to global trade rules.

World merchandise trade expanded 2.8 percent in 2014, down from the 3.1 percent the WTO had projected and the third straight year in which trade grew less than 3 percent. Developing country exports grew by 3.3 percent, compared to 2.2 percent for developed country exports. The trend was reversed for imports, which grew 3.2 percent for developed countries but only 2.0 percent for developing countries.

Trade is now expected to increase 3.3 percent in 2015 (down from 4 percent) and 4 percent in 2016, below the average of 5.1 percent since 1990 and the pre-economic crisis average of 6.0 percent. Developing economy exports should grow 3.6 percent and imports should rise 3.7 percent, while developed economy imports and exports are expected to both increase 3.2 percent.

Asia should have the strongest export performance of any region (5.0 percent), the WTO states, followed by North America (4.5 percent) and Europe (3.0 percent). The weakest export growth will be in South America (0.2 percent) and other regions (-0.6 percent, including Africa and the Middle East). North America and Asia should both see imports increase by around 5 percent, while Europe should record import growth of less than 3 percent. In contrast, South America and other regions are expected to record import declines of 0.5 percent and 2.4 percent, respectively.

The WTO notes that there are numerous downside risks to this forecast, including the unbalanced nature of the global economic recovery, geopolitical tensions, divergent monetary policies, exchange rate fluctuations and slower growth in emerging economies.

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