Jonathan Fowler Geneva
Global commerce was set to grow by 4.7 percent this year, the World Trade Organisation (WTO) said yesterday, with recovery in rich nations expected to mitigate risks in developing economies.
The WTO previously forecast that trade would expand by 4.5 percent this year, up from an estimated 2.1 percent last year.
The latest forecast points to substantially more than a doubling of the growth achieved last year.
Trade is a key measure of the health of the global economy, which it stimulates and reflects. Asia would continue to fuel growth rates, the WTO said, although China’s strong expansion was slowing.
In addition, Europe and North America’s recovery is set to be a key driver on the import and export fronts.
“For the last two years trade growth has been sluggish. Looking ahead, if gross domestic product (GDP) forecasts hold true, we expect a broad-based but modest upturn in 2014, and further consolidation of this growth in 2015,” WTO chief Roberto Azevêdo said.
The organisation predicted that trade growth would pick up pace next year, reaching 5.3 percent.
“Prospects for world trade and output in 2014 and 2015 are better than they have been, but leading economies remain fragile, including some of the most dynamic developing countries that recently were propping up demand,” it said in a statement.
“Downside risks to trade abound, but significant upside potential also exists, as the US economy seems to be gaining momentum and the EU appears to have turned a corner.
“At the same time, developing economies have slowed appreciably, for a variety of reasons internal and external. Which of these forces is stronger may determine how world trade evolves over the next one to two years.”
WTO economists noted that a growth rate of 5.3 percent in 2015 would bring trade growth back to its 20-year average. For the past two years, growth has averaged only 2.2 percent. The economists added that the 2014 forecast was based on an assumption that global GDP would expand by 3 percent.
The organisation said that risks had receded in Europe thanks to an easing of the euro zone crisis, and in the US owing to the easing of brinkmanship over budget limits and tax policy between the administration of President Barack Obama and the Republicans, which led to last year’s government shutdown.
Concerns in developing economies include large current account deficits in India and Turkey, currency crises in countries including Argentina, overinvestment in productive capacity, and rebalancing economies to rely more on domestic consumption and less on exports.
The WTO also pointed to geopolitical risks, notably conflicts in the Middle East, Asia and Ukraine, which it said could provoke higher energy prices and disrupt trade flows if they escalated.
“It’s clear that trade is going to improve as the world economy improves. But I know that just waiting for an automatic increase in trade will not be enough for WTO members,” Azevêdo said. – Sapa-AFP