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Sluggish economy, conflicts weigh on global trade: WTO

Sluggish economy, conflicts weigh on global trade: WTO

GENEVA: Sluggish economies and global conflicts are taking their toll on world commerce, the World Trade Organisation said on Tuesday, slashing its trade growth outlook for 2015.

“For trade growth it is important that you have certain elements present in the global economy (including) stability, predictability, and those things are not there right now,” WTO chief Roberto Azevedo told reporters in Geneva.

With economies around the world still struggling to fully recover from the 2008 financial crisis, and with conflicts flaring in places like Ukraine and the Middle East, global trade is expanding far more slowly than anticipated a year ago.

The Ebola outbreak in west Africa, unusually harsh winter weather in the United States and collapsing world oil prices are also taking their toll, as are strong exchange rate fluctuations, Azevedo said.

“All of these things have effects, sometimes destabilising effects,” Azevedo said.

On Tuesday, WTO said preliminary estimates showed global trade had expanded just 2.8 per cent last year and was expected to swell only 3.3pc this year.

A year ago, the WTO was singing a different tune.

Last April, it had forecast that trade would expand 4.6pc in 2014 and 5.8pc this year.

But it downgraded those predictions in September, to 3.1pc and 4pc respectively, before slashing them further on Tuesday.

“Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis,” Azevedo said.

“Looking forward, we expect trade to continue its slow recovery, but with economic growth still fragile and continued geopolitical tensions, this trend could easily be undermined,” he warned.

Last year was the third consecutive year in which trade grew less than 3pc, WTO said in a statement.

In fact, trade growth averaged just 2.4pc between 2012 and 2014 -- the slowest rate on record for a three-year period when trade was expanding.

Trade growth is expected to pick up in 2016 with an expansion of 4pc, it said, warning though that going forward, trade growth looks set to remain well below the annual average of 5.1pc seen since 1990.

SLOW RECOVERY: “We are cautiously forecasting that trade will continue its slow recovery, “Azevedo told reporters. WTO acknowledged though that “risks to the trade forecasts are mostly on the downside.”

Trade is a key measure of the health of the global economy, which it both stimulates and reflects.

But Azevedo warned Tuesday that a systemic shift might be under way and that trade expansion would no longer far outstrip overall economic growth as it has largely done for decades.

Published in Dawn, April 15th, 2015

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