WTO: Global trade rebounding strongly but threats remain

GENEVA: The World Trade Organisation (WTO) yesterday boosted its forecast for global trade growth in 2017 as commerce rebounded strongly, but cautioned that major threats could still derail the positive trajectory.

The better outlook was driven by improved trade flows within Asia and stronger demand for goods in North America through the first half of the year, the 164-member Geneva-based body said.

An April projection of 2.4% growth for this year has been upped to 3.6%, the organisation said in a press release, headlined “WTO upgrades forecast for 2017 as trade rebounds strongly”.

“Growth of 3.6% would represent a substantial improvement on the lacklustre 1.3% increase in 2016,” it said.

The fast pace of 2017, which followed a very weak year, is unlikely to be sustained in 2018, with US and eurozone monetary policy expected to tighten and China likely to rein in easy credit to stop its economy from overheating, the WTO said.

“All of these factors should contribute to a moderation of trade growth in 2018 to around 3.2% (the full range of the estimate being from 1.4% to 4.4%,” it said.

The ratio of trade growth to gross domestic product growth, which traditionally ran at about 2:1 but has slumped to about 1:1 in the decade since the financial crisis, should rise this year, with trade growing 1.3 times faster than the global economy, it said.

The WTO had been steadily lamenting the stagnant global trade climate that persisted following the 2008 financial crisis.

While WTO director-general Roberto Azevedo applauded the return of good news, he renewed his concerns over worrying political headwinds, especially protectionism.

“The improved outlook for trade is welcome news, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” Azevedo said in a statement.

“These risks include the possibility that protectionist rhetoric translates into trade restrictive actions, a worrying rise in global geopolitical tensions and a rising economic toll from natural disasters,” he added.

Azevedo again urged world leaders to “resist the temptation of protectionism” while trying to improve, rather than restrict global trade. – Agencies