WTO reduces global trade growth rate forecast to 2.8%

The Dollar Business Bureau

The global merchandise trade during the current year is expected to grow at the rate of 2.8%, lower than the previous estimate of 3.3%, mainly due to slowing import demand in China, Brazil and other emerging economies. The World Trade Organisation, in its quarterly report, released on Wednesday, also said that the international trade is estimated to grow at 3.9% in 2016. The projection for next year is also lower than 4% estimated in earlier report in April 2015. The average growth rate for the last two decade is 5%. “These revisions reflect a number of factors that weighed on the global economy in the first half of 2015, including falling import demand in China, Brazil and other emerging economies; falling prices for oil and other primary commodities; and significant exchange rate fluctuations,” the global body said. The outlook for the world economy and trade in the second half of 2015 was affected by the uncertainty over the monetary policy of the US Federal Reserve and volatility in the financial markets. “At the time of our last forecast in April 2015, world trade and output appeared to be strengthening based on available data through 2014Q4. However, results for the first half of 2015 were below expectations as quarterly growth turned negative, averaging ‑0.7% in Q1 and Q2,” the WTO said. On the basis of the latest projections, 2015 will mark the fourth consecutive year in which annual trade growth has fallen below 3%. Despite quarterly declines in the first half of 2015, the WTO said, year-on-year growth in trade remained positive at 2.3%. The report forecast that the exports from developing economies are expected to grow more slowly at 2.4% in 2015 and 3.8% in 2016. “The strongest downward revision to the previous export forecast for 2015 was applied to Asia, where our estimate was lowered to 3.1% from 5.0% in April.  This is mostly due to falling intra-regional trade as China's economy has slowed,” the report said. Indian exporters who have already been facing challenge due to global slowdown have suggested some quick measures to improve shipments. FIEO President S C Ralhan, President of the Federation of Indian Export Organisation, said Indian exporters have the ability to face such global challenges, if necessary government support is made available. Ralhan asked the government to take some immediate steps like “reducing the cost of credit, immediate re-introduction of interest subvention scheme, reduction of transaction and logistics cost, expeditious refund of taxes and quick decision on pending issues related to exports”.    

October 1st, 2015 | 1:35pm IST.