The World Trade Organization’s recently published forecast predicts merchandise trade volume growth of 4.4 percent this year.
The World Trade Organization is predicting a 4.4 percent increase in merchandise trade volume this year, following a significant increase of 4.7 percent in 2017, according to a recent trade growth report.
This would be well above the average of 3.0 percent yearly growth since the financial crisis, although still below the average of 4.8 percent yearly growth since 1990.
The WTO, which bases its quarterly forecasts for merchandise trade growth on economic factors such as global GDP estimates, predicts trade growth to fall in a range of 3.1 percent to 5.5 percent, as measured by average imports and exports, in 2018. This optimistic prediction, however, also comes as increasing tensions between some WTO member countries have led to trade policy decisions that threaten to negatively affect post-financial crisis economic recovery.
“Increased use of restrictive trade policy measures and the uncertainty they bring to businesses and consumers could produce cycles of retaliation that would weigh heavily on global trade and output,” the WTO said in its report.
“Faster monetary tightening by central banks could trigger fluctuations in exchange rates and capital flows that could be equally disruptive to trade flows,” the organization added. “Finally, worsening geopolitical tensions could be counted on to reduce trade flows, although the magnitude of their impact is unpredictable. Technological change means that conflicts could increasingly take the form of cyberattacks, which could impact services trade as much or more than goods trade.”
According to data provided by the WTO, merchandise trade volume grew 4.7 percent in 2017, largely driven by rising import demand and increased investment spending, especially in developing countries. Asia had the fastest trade volume growth in 2017, both in imports (6.7 percent growth) and exports (9.6 percent growth). North America also saw significant growth last year, rebounding from a mediocre 2016, with 4.2 percent growth in imports and 4.0 percent growth in exports.
The largest barrier to increasing trade growth in 2018, according to the report, is the current atmosphere of trade policy uncertainty fueled by rising tensions between some WTO members, particularly the United States and China. Restrictive trade policies and retaliatory measures could lead to significant disruption in global trade and potentially reduce trade volumes. The unpredictable nature of the developing situation between the two countries makes it difficult to measure the potential impact of any major policy decisions, WTO said.
WTO Director-General Roberto Azevêdo said he considers the heightened tensions between China and the United States to be a serious threat to the global economy, warning of the consequences of escalating into a retaliatory cycle.
“The pressing trade problems confronting WTO members is best tackled through collective action,” he said of the trade growth projection. “I urge governments to show restraint and settle their differences through dialogue and serious engagement.”
In spite of all the uncertainty, however, the WTO’s outlook remains mostly positive for both global GDP growth and trade volume growth throughout the rest of 2018 and into 2019, with a projection of 4.0 percent growth for next year.
WTO anticipates strong trade growth in 2018
