In its latest trade statistics and outlook report, the World Trade Organization (WTO) forecasts the world merchandise trade volume to grow within a range of 1.8-3.6% in 2017 (on average 2.4%). This growth rate is slightly up from a very weak growth of 1.3% in 2016. WTO expects trade growth to further pick up to 2.1-4% in 2018.
On the positive side, the global GDP growth is expected to rebound to 2.7% in 2017 from 2.3% in 2016, which will contribute to the expansion of world trade. Notably, WTO expects emerging economies to return to modest economic growth in 2017. However, WTO sees policy uncertainty, including the imposition of restrictive trade measures and monetary tightening, a main risk factor to world trade this year.
WTO also noted that since the financial crisis, the ratio of trade growth to GDP growth has fallen to around 1:1. And 2016 marked the first time since 2001 that this ratio has dropped below 1, to a ratio of 0.6:1. Historically, the volume of world merchandise trade has tended to grow about 1.5 times faster than world output. WTO is cautiously optimistic that the ratio will partly recover in 2017, but the ratio will remain a cause for concern.
At the press conference, Trump Administration’s trade policy receives significant attention. But according to Roberto Azevêdo, Director-General of WTO, “just an overall statement of the intention to go one particular way or another, does not tell us what the trade policy is and does not tell us what the impact of that trade policy will be. Instead, the devil is in the details”. Roberto said he is waiting to see Trump’s new trade team in place (for example, the new US Trade Representative) and he looks forward to the meaningful dialogues with the team to know more details and clarity of U.S. trade policy. Until then, any comments on the impact of Trump Administration’s trade policy would be just speculations.
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10 thoughts on “WTO Forecasts World Trade to Grow 2.4% in 2017”
A growth of trade can only mean good things for the participating countries. It’s interesting to me, with the TPP being in the “freezer” that the WTO expects a growth in trade. The U.S. is a key player in the trade market because the U.S. has the highest GPD in the world. Therefore, not having the U.S. involved with the TPP at this stage is a loss on the market. I wonder why there is a rather large growth rate predicted for a year where the U.S. plans to be participating less in trade, according to President Trump. I am excited to see what the numbers look like at the end of 2017 and how the prediction will be adjusted for 2018, if at all.
Great question! WTO forecasts a slightly higher growth rate of global trade volume this year because of the gradual recovery of the global economy. GDP is still one of the most effective indicators measuring trade growth. WTO did acknowledge that public uncertainty may affect trade in a negative way. Reporters asked many questions about Trump’s trade policy during the Q&A session.
I was also surprised by this projected growth rate due to the uncertainty created by the Trump administration. I know they are using previous data to build projections, but this is probably the most erratic, unpredictable administration the US has ever seen. Can we really have confidence in any projections for the following year, given that the president just makes wild statements about trade relationships and has real impact on trade confidence?
I think that a lot of the uncertainty and moderate estimates that are being reported is due to the unknowingness of what lies ahead in trade policy. It is hard to create solid and strong predictions when FTAs could be dismantled at any moment. As the WTO reported and is shown on the graph, it think that it is interesting that as trade increases amongst nations, the overall GDP of the world increases with it equally. Do you think that these estimates are conservative or that these are accurate or that we are safeguarding for any political disruptions?
I think it is hard to say what is going to happen without the trade policy, there is much uncertainty. I think the ratio of trade and growth is going to continue to fall. It is definitely a postitive thing that they think the WTO is going to continue going up.
The United States is a very integral part of the trade market, because they currently have the highest GPD in the world. With this in mind, it is detrimental for many if the United States decides to leave the TPP. There could be potentially a major loss in profits and jobs throughout the world. However, the WTO is predicting that the numbers are actually going to increase and have a larger growth rate. It will be interesting to see how the numbers will look after such a major change in trade.
I think it’s interesting that the WTO is forecasting an increase in the percentage of world trade during a time where our new administration appears to be so anti-trade. We’ve seen the benefits world trade has for various world economies and for GDP. Hopefully the Trump administration will come to understand that setting strict polices on trade and trying to manufacture solely in the US will have negative outcomes for our country- while every other country is expanding its trade, we will be set back and fall behind.
good question! The WTO report did acknowledge the potential impact of policy uncertainty on global trade. the forecasted growth rate is in a range of 1.8% to 3.6%. And I remember at the press conference, there were so many questions about what Trump’s trade policy could mean for the global trade.
In the world of globalization, I am not surprised that trade is expected to grow and keep growing. With multiple FTA, countries are taking advantage of the trade opportunities and re growing the global supply chain. Trade is an essential part of a working global marketplace, and I expect trade to keep growing and remain an important part of any country around the world local economy. The US needs to ensure they can keep up with other countries around the globe and make sure that they are not being left behind.
In response to your first point: the current dollar value of world textiles (SITC 65) and apparel (SITC 84) exports totaled $291 billion and $445 billion respectively in 2015, but decreased by 7.2 percent and 8.0 percent from a year earlier. https://shenglufashion.wordpress.com/2016/07/27/wto-reports-world-textile-and-apparel-trade-in-2015/
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