Global merchandise trade growth to slow to 4.4%: WTO
Growth in global trade is expected to moderate to 4% 2019, which is ‘below the average rate of 4.8% since 1990 but still firmly above the post-crisis, says WTO
Geneva: Global merchandise trade growth is forecast to hover around 4.4% this year as compared to around 4.7% last year amid “escalating trade tensions” stemming from the continued threats of a trade war between the US and China which could torpedo the current “positive” outlook, the World Trade Organization (WTO) suggested on Wednesday.
In 2019, the growth in global trade is expected to moderate to 4%, which is “below the average rate of 4.8% since 1990 but still firmly above the post-crisis (after 2008) average of 3%,” WTO claimed in a press release.
But merchandise trade volume growth has to be taken with a caveat as it may have been inflated due to the persistent weakness of trade over the previous two years that provided a lower base, WTO admitted.
In value terms, global trade notched a growth of 10.7% for merchandise exports and 7.4% for commercial services exports last year. The ratio of trade growth to GDP growth, or “elasticity of trade with respect to income—which remained at 1.5 times faster than world real GDP at market exchange rates for world merchandise trade volumes—has now rebounded from 0.8 in 2016 to 1.5 in 2017”.
The latest forecasts “do not factor in the possibility of a dramatic escalation of trade restrictions”, WTO director general Roberto Azevedo said. He suggested that trade forecasts do not foresee the “possible policy” actions, without spelling out who is considering such actions.
Last year, exports and imports of developed countries grew by 3.5% and 3.1%, respectively, while developing countries recorded export growth of 5.7% and import growth of 7.2%. Major economies in Asia contributed significantly to buoyant growth in merchandise trade by consuming more imports than their exports to other countries.
The value of global exports of merchandise goods stood at around $17.2 trillion last year while the value of imports remained around $17.5 trillion. The US, for which tackling the growing trade deficit is a core priority, recorded a deficit of more than $800 billion. The Trump administration, particularly its controversial adviser on trade Peter Navarro, has repeatedly demanded “rebalancing” of the deficit with China.
Asked to comment on Navarro’s strident demands for rebalancing, the WTO director general said: “It is their call and their view, and they are entitled to have that view.”
Azevedo went on to add: “I think we live in an interconnected world; about two-thirds of the global economy is connected to value chains. Trade is somehow connected to global value chains; the previous perception of what a trade surplus and deficit means and the need to look at them with different lenses is simplistic...We have to see the nature of trade surplus and deficits and I’m sure they are doing that”.
For global commercial services, the US recorded a surplus of $ 246 billion last year while China recorded a deficit of $ 226 billion. India notched up a modest surplus in commercial services of $ 29 billion.
As regards a trade war between the US and China, Azevedo said: “Technically I would say no, we are not there yet...Still a number of measures have been announced and not implemented [and ] there are conversations and dialogues ongoing between these players you mentioned.”
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