Modest trade growth forecast for this year
World trade is projected to see a modest growth of 4.7% in 2014 and
to grow at a slightly faster pace of 5.3% next year, economists at the
World Trade Organisation (WTO) said.
In its latest report on trade figures for 2013 and prospects for 2014
and 2015 released recently, WTO sources said that although the forecast
of 4.7% growth in 2014 is more than double the 2.1% increase of last
year, it remains below the 20-year average of 5.3%.
WTO economists said that the trade forecast for 2014 is premised on
an assumption of 3.0% growth in world GDP at market exchange rates,
while the forecast for 2015 assumes output growth of 3.1%.
"Risks to the trade forecast are still mostly on the downside, but
there is some upside potential, particularly since trade in developed
economies starts from a low base," they said, however, cautioning that
"volatility is likely to be a defining feature of 2014 as monetary
policy in developed economies becomes less accommodative." They further
said that some developed economy risk factors have receded considerably
since last year, including the sovereign debt crisis in Europe and
fiscal brinksmanship between the executive and legislative branches of
government in the United States.
"Developing economies are now the focus of several gathering risks,
including large current account deficits (e.g. India, Turkey), currency
crises (Argentina), over investment in productive capacity and
rebalancing economies to rely more on domestic consumption and less on
external demand," said the economists.
The geopolitical risks have introduced an additional element of
uncertainty to the forecast, in that civil conflicts and territorial
disputes in the Middle East, Asia and Eastern Europe could provoke
higher energy prices and disrupt trade flows if they escalate.
"However, since the timing and impact of these kinds of risks are
inherently unpredictable, they are not considered directly in our
forecasts," the WTO economists said.
"For the last two years trade growth has been sluggish. If GDP
forecasts hold true, we expect a broad-based but modest upturn in 2014,
and further consolidation of this growth in 2015," said WTO
Director-General Roberto Azevedo in a press release.
"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," he said.
Azevedo advocated actively supporting trade growth 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 discussing
new ideas and new approaches which would help us to get the job done -
and to do it quickly," he said.
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 United States.
"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 WTO also noted that recent business surveys and industrial
production data point to a "firming up" of the recovery in the United
States and Europe this year. The gradual improvement of US employment
data has allowed the Federal Reserve to proceed with its planned
'tapering', of their third round of quantitative easing (QE3).
-Third World Network Features
|
