WTO predicts modest trade recovery to continue in 2015

GENEVA - World Trade Organization (WTO) economists Tuesday announced that growth in the volume of world merchandise trade would pick up only slightly over the next two years, rising from 2.8 percent in 2014 to 3.3 percent in 2015 and eventually to 4.0 percent in 2016.

WTO predicted trade expansion will therefore remain well below the annual average of 5.1 percent posted since 1990.

"Trade growth has been disappointing in recent years, due largely to prolonged sluggish growth in GDP following the financial crisis. 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," said WTO Director-General Roberto Azevedo.

According to WTO statistics, the modest gains in 2014 marked the third consecutive year in which trade grew less than 3 percent.

Trade growth averaged just 2.4 percent between 2012 and 2014, the slowest rate on record for a three-year period when trade was expanding.

WTO noted several factors contributed to the sluggishness of trade and output in 2014 and at the start of 2015, including slowing GDP growth in emerging economies, an uneven recovery in developed countries, and rising geopolitical tensions, among others.

In addition, strong exchange rate fluctuations, including a 14 percent appreciation of the US dollar between July and March, have further complicated the trade situation and outlook.

According to WTO's Trade Statistics and Outlook, exports of developing and emerging economies are forecast to grow 3.6 percent in 2015, while their imports are expected to increase by 3.7 percent.

Meanwhile, a 3.2 percent rise is anticipated for developed economies on both the export and import sides.

At a regional level, WTO predicts Asia should have the strongest export performance of any region this year (5.0 percent growth), followed closely by North America (4.5 percent) and Europe (3 percent).

The weakest export growth in 2015 will be in South America (0.2 percent) and other regions (minus 0.6 percent, comprising Africa and Middle East), although small changes in export volumes from year to year are normal for resource-rich regions.

WTO said China's growth is still likely to exceed that of other major economies this year and next, but it may do so by a smaller margin than in the past. This suggests steady rather than accelerating import demand in China.

WTO also warned that numerous downside risks to the forecast exist, which including geopolitical tensions, divergent monetary policies, exchange rate fluctuations and slower growth in emerging economies.