Geneva, Switzerland (BBN) – The World Trade Organization (WTO) has predicted that the global trade will grow by a modest 4.7 percent in 2014 and at a slightly faster rate of 5.3 percent in 2015.
Although the 2014 forecast of 4.7 percent is more than double the 2.1 percent increase of last year, it remains below the 20-year average of 5.3 percent. For the past two years, growth has averaged only 2.2 percent, according to a WTO annual report, released on Monday.
The sluggish pace of trade growth in 2013 was due to a combination of flat import demand in developed economies (0.2 percent) and moderate import growth in developing economies (4.4 percent).
On the export side, both developed and developing economies only managed to record small, positive increases (1.5 percent for developed economies, 3.3 percent for developing economies).
“For the last two years trade growth has been sluggish. Looking ahead, if GDP forecasts hold true, we expect a broad-based but modest upturn in 2014, and further consolidation of this growth in 2015”, WTO Director-General Roberto Azevêdo said. “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.”
“We can actively support trade growth by updating the rules and reaching new trade agreements. The deal in Bali last December illustrates this.”
“Concluding the Doha round would provide a strong foundation for trade in the future, and a powerful stimulus in today’s slow growth environment. We are currently discussing new ideas and new approaches which would help us to get the job done — and to do it quickly.”
Several factors contributed to the weakness of trade and output in 2013, including 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.
The latter contributed to financial volatility in developing economies in the second half of 2013, particularly in certain “emerging” economies with large current account imbalances.
Recent business surveys and industrial production data point to a firming up of the recovery in the United States and Europe in early 2014.
The gradual improvement of US employment data has allowed the Federal Reserve to proceed with its planned “tapering”, of their third round of quantitative easing (“QE3”) The outlook for the European Union has also improved, although growth there will remain uneven as long as peripheral EU economies continue to underperform core ones. Output growth in Japan should be slightly lower this year as planned fiscal consolidation is implemented. Finally, despite having hit a soft patch recently, developing economies (including China) should continue to outpace developed economies in terms of gross domestic product (GDP) and trade growth in the coming year, but some could encounter setbacks, particularly those most exposed to the recalibration of monetary policy in developed countries.
BBN/SSR/AD-14Apr14-8:55 pm (BST)