Global trade growth to decline to 1.7% in 2016: WTO

The Dollar Business Bureau

The World Trade Organisation (WTO) has changed its previous forecast of global trade growth of 3.9 per cent, thus reflecting a new estimate of 1.7 per cent.

The intergovernmental organisation, which had forecasted a 2.8 per cent rise for the same in September 2015, has attributed this decline to factors such as reduction in commodity prices and a slowdown in the Chinese and European economies.

The organisation has released a similar forecast for the year 2017 with an estimated figure for global trade between 1.8 per cent and 3.1 per cent. The earlier figure stood at 3.6 per cent.

According to WTO Director-General Roberto Azevedo, the revised data should act as a reminder to the governments which should not end up making policies that worsen the global trade scenario. This may otherwise hamper the process of job creation which can be detrimental to economic growth and development which are closely linked to an open trading system.

The data is also a sign of the fact that the governments around the globe have shifted focus to domestic production to protect their own industries in a bid to avoid foreign competition. This in turn has affected the world economy signifying a major slowdown in global trade.

The sluggishness in foreign trade is bound to affect the Indian market with exports already witnessing a marginal reduction of 0.3 per cent for the second consecutive month in August. The country witnessed exports to the tune of $261 billion in 2015-2016, facing a 15.85 per cent decline from $310 billion in the previous year.

The government had forecasted a $300 billion export target for the previous financial year but it had to revise it owing to a negative growth in merchandise trade.