Global commerce is expected to grow just 3.3 percent this year, the World Trade Organization said Tuesday, slashing its previous forecast of 4.0 percent over weak global economic growth and rising geopolitical tensions.
The trade body also said preliminary estimates showed trade had expanded just 2.8 percent last year, missing September’s forecast of 3.1 percent.
“Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis,” said WTO chief Roberto Azevedo.
“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 three percent.
“With geopolitical growth still fragile and geopolitical tensions ongoing we are cautiously forecasting that trade will continue its slow recovery,” Azevedo told reporters.
Trade growth is expected to pick up in 2016 with an expansion of 4.0 percent, according to the WTO.
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 underway and that trade expansion would no longer far outstrip overall economic growth as it had largely been doing for decades.
WTO pointed out that “the 2.8 percent rise in world trade in 2014 barely exceeded the increase in world GDP for the year, and forecasts for trade growth in 2015 and 2016 only surpass expected output growth by a small margin.”
Azevedo said that the 2015 forecast was based on an assumption that global GDP would expand by nearly 3.0 percent, while the 2016 forecast depended on economic growth reaching over three percent.
The International Monetary Fund was expected to publish its latest global output outlook later Tuesday.
A year ago, the WTO was singing a different tune.
Last April, it had forecast that trade would expand 4.6 percent in 2014 and 5.8 percent this year.
But it downgraded those predictions in September.
“Conflict in the Middle East also stoked regional instability, as did an outbreak of Ebola haemorrhagic fever in west Africa,” WTO said Tuesday, also pointing to unusually harsh winter weather in the United States and collapsing world oil prices.
Strong exchange rate fluctuations had also had a negative impact.
“All of these things have effects (and), sometimes destabilising effects,” Azevedo said.
“For trade growth it is important that you have certain elements present in the global economy. One of them is stability, predictability, and those things are not there right now,” he warned.