Modest trade growth anticipated for 2014, 2015 following two year slump
World trade is expected to grow by a modest 4.7 per cent in 2014 and at a slightly faster rate of 5.3 per cent in 2015, WTO economists said today.
Although the 2014 forecast of 4.7 per cent is more than double the 2.1 per cent increase of last year, it remains below the 20-year average of 5.3 per cent, it said, adding, "For the past two years, growth has averaged only 2.2 per cent."
The sluggish pace of trade growth in 2013 was due to a combination of flat import demand in developed economies at 0.2 per cent and moderate import growth in developing economies at 4.4 per cent.
On the export side, both developed and developing economies only managed to record small, positive increases by 1.5 per cent for developed economies, and 3.3 per cent for developing economies.
"For the last two years trade growth has been sluggish," it added.
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," he said, "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," he said, adding that 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 US. 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.
The preliminary estimate of 2.1 per cent for world trade growth in 2013 refers to the average of merchandise exports and imports in volume terms, i.e. adjusted to account for differences in inflation and exchange rates across countries. The figure is slightly lower than the WTO’s most recent forecast of 2.5 per cent for 2013, issued last September. The main reason for the divergence was a stronger than expected decline in developing economies’ trade flows in the second half of last year. For the second consecutive year, world trade has grown at roughly the same rate as world gross domestic product (GDP) – a measure of countries’ economic output – at market exchange rates, rather than twice as fast, as is normally the case.
Recent business surveys and industrial production data point to a firming up of the recovery in the US and Europe in early 2014.
In 2013, the dollar value of world merchandise exports rose by 2.1 per cent to $18.8 trillion. This growth rate was slightly less than the WTO’s export volume growth estimate for the year (+2.4 per cent), which implies that export prices declined slightly from one year to the next.
Meanwhile, the value of world commercial services exports rose by 5.5 per cent to $4.6 trillion.
The trade forecast for 2014 is premised on an assumption of three per cent growth in world GDP growth at market exchange rates, while the forecast for 2015 assumes output growth of 3.1 per cent.