Growth in the volume of world trade is expected to remain sluggish in 2016 at 2.8%, unchanged from the 2.8% increase registered in 2015, the World Trade Organization (WTO) estimates.
Imports of developed countries should moderate this year while demand for imported goods in developing Asian economies should pick up. Global trade growth should rise to 3.6% in 2017, WTO economists reported on 7 April.
According to WTO, risks to this forecast are mostly on the downside, including a sharper than expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements. On the other hand, there is some upside potential if monetary support from the European Central Bank succeeds in generating faster growth in the euro area.
“Trade is still registering positive growth, albeit at a disappointing rate,” WTO Director-General Roberto Azevêdo said.
“This will be the fifth consecutive year of trade growth below 3%. Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow.”
However, WTO Members can take a number steps to use trade to lift global economic growth — from rolling back trade restrictive measures, to implementing the WTO Trade Facilitation Agreement, which would dramatically cut trade costs around the world, boosting trade by up to USD 1 trillion a year, Azevêdo added.
Alternative indicators of economic and trade activity in the opening months of 2016 are mixed, nevertheless container throughput at major ports has recovered much of the ground lost to the trade slowdown last year, while automobile sales — one of the best early signals of trade downturns — have continued to grow at a healthy pace in developed countries, WTO said.
On the other hand, composite leading indicators from the Organization for Economic Cooperation and Development point to an easing of growth in OECD countries, and financial market volatility has continued in 2016. Therefore trade growth may remain volatile in 2016.
Exports of developed and developing countries should grow at around the same rate in 2016, 2.9% in the former and 2.8% in the latter. Meanwhile, imports of developed economies are expected to outpace those of developing countries in 2016, with a 3.3% rise in the former compared to a 1.8% increase in the latter, WTO’s estimates show.
Asia is expected to record the fastest export growth of any region this year at 3.4%, followed by North America and Europe, each at 3.1%. South and Central America and Other regions will lag behind at 1.9% and 0.4%, respectively. North America should see its imports increase by 4.1% this year, while Asian and European imports should both register growth of 3.2%. Finally, imports of South and Central America and Other regions are set to contract again this year as oil and other commodity prices remain low, but the degree of contraction should be less.