The Strategist

WTO Changes Expectations on World Trade Growth Forecasts

04/14/2015 - 16:47

According to forecasts by the World Trade Organization (WTO), the growth of world merchandise trade increased from 2.8% in 2014 to 3.3% in 2015, and in 2016, it would leap again up to 4.0%. This is less than previously expected.

by World Trade Organization
by World Trade Organization
- Thus, the increase in trade will remain significantly below the annual average of 5.1%, calculated from 1990, - said a forecast published on Tuesday on the website of WTO.

A year ago, the economic forecasts predicted a significant trend GDP growth in the United States and in the euro area in 2014. These expectations were not fulfilled - the quarterly figures in the US and activity in the euro area were very mediocre. In 2014, world trade has increased by 2.8% while the increase of 3.1% was expected.

Growth of world trade less than 3% shows up for the third year in a row. Between 2012 and 2014, trade growth has averaged only 2.4%, what was the lowest three-year index (except for 1975 and 2009, when world trade actually declined).

- At least in the short term, increased trade will not significantly outpace overall economic growth, which was a general law for decades. The growth of world trade in 2014 to 2.8% barely exceeded the annual global GDP growth forecast for 2015 and 2016 is that the growth of trade with only a small margin will exceed the expected increase in production, - said WTO.

Among the factors that contributed to the slowdown in the growth of trade and production in 2014 and early 2015, including a slowdown in GDP growth in emerging economies, the WTO called the uneven economic recovery in developed countries and rising geopolitical tensions in the world.
- The volatility of the exchange rate, including a 14% strengthening of the US dollar against other currencies in the period from July to March, further complicate the situation in trade and its prospects, - said the statement.

WTO experts called yet another reason to reduce the growth in world trade. This is the decline in real incomes and imports in oil-importing countries, which are linked to the collapse in world oil prices in 2014 (a decrease of 47% in the period between July 15 and December 31).

Economist from the Department of Economic Research and Statistics WTO Coleman Nee suggested that in 2015, oil prices will remain at $ 60 per barrel, and in 2016 will increase to $ 70 per barrel.

- We expect the price of oil at $ 60 a barrel this year and a slight improvement to $ 70 a barrel next year. These are our predictions, based on forecasts for raw materials, - he said.

In this case, the return of oil prices to $ 100 a barrel in the near future is unlikely.

Previously, the WTO said that the level of world trade has fallen to the level of 1980-1984 years.