World Trade Organization economists expect global trade to grow by 4.7 percent in 2014 and 5.3 percent in 2015, the WTO said this week.
Although the 2014 forecast of 4.7 percent is more than double the 2.1 percent increase of last year, it remains below the 20-year average of 5.3 percent, the organization noted. For the past two years, growth has averaged only 2.2 percent.
The WTO said the sluggish pace of trade growth in 2013 was due to a combination of flat import demand in developed economies (0.2 percent) and moderate import growth in developing economies (4.4 percent). On the export side, both developed and developing economies managed to record small, positive increases (1.5 percent for developed economies and 3.3 percent for developing economies).
“For the last two years, trade growth has been sluggish,” WTO Director-General Roberto Azevêdo said in a statement. “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. It's clear that trade is going to improve as the world economy improves. But, I know that just waiting for an automatic increase in trade will not be enough for WTO members.”
Azevêdo urged WTO members to support trade growth by “by updating the rules and reaching new trade agreements. 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.”
The WTO said a worrying trend the past two years is that global trade has grown roughly in tandem with global GDP growth – historically, global trade has grown at twice the rate of GDP.
Perhaps more worrying, the gap between forecast growth and the expected trend line of growth established between 1990 and 2008 continues to grow, such that “the divergence between the pre-crisis trend and current levels of world trade continues to widen. This gap stood at 17 percent of the trend level in 2013 and will rise to 19 percent by 2014 if our projections are realized, which would place world trade further below its the pre-crisis trend than it was in 2009 during what economists have called the ‘great trade collapse.’”
Meanwhile, the WTO also pointed to a “firming up” of the recovery in developed economies in early 2014, while economic worries are now more concentrated in the higher risk developing economies.