WTO lowers global trade growth forecast to 2.8% for 2015

Geneva: Multilateral body WTO Wednesday lowered its trade growth forecast to 2.8 percent from 3 percent for this year due to falling import demand and lower commodity prices in the global market.

It has also lowered the trade growth projections for 2016 to 3.9 percent from 4 percent.

"WTO economists have lowered their forecast for world trade growth in 2015 to 2.8 percent, from the 3.3 percent forecast made in April, and reduced their estimate for 2016 to 3.9 percent from 4 percent," WTO said in a statement.

The forecast will have an adverse implication for India's exports which have been witnessing continuous decline.

India's exports contracted for the ninth month in a row, dipping 20.66 percent in August to USD 21.26 billion, due to steep decline in engineering and petroleum shipments.

The WTO said that 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.

"Volatility in financial markets, uncertainty over the changing stance of monetary policy in the US and mixed recent economic data have clouded the outlook for the world economy and trade in the second half of the year and beyond," it said.

It added that if the current projections are realised, 2015 will mark the fourth consecutive year in which annual trade growth has fallen below 3 percent and the fourth year where trade has grown at roughly the same rate as world GDP, rather than twice as fast, as was the case in the 1990s and early 2000s.

"WTO members can help to set trade growth on a more robust trajectory by seizing the initiative on a number of fronts, notably by negotiating concrete outcomes by our December Ministerial Conference in Nairobi," said WTO's Roberto Azevedo.

"At the time of our last forecast in April 2015, world trade and output appeared to be strengthening based on available data through 2014 Q4.

"However, results for the first half of 2015 were below expectations as quarterly growth turned negative, averaging -0.7 percent in Q1 and Q2," the WTO added. 

WTO said that risks to the forecast are firmly on the

downside, the most prominent being a further slowing of economic activity in developing economies and financial instability stemming from eventual interest rate rises in the US.

"Asian export and import growth for 2015 has been revised down as slower growth in Chinese imports has reduced intra-regional trade," it said.

It also said that quarterly export growth of developed economies was essentially flat in the first two quarters of 2015, but those of developing countries were more negative.

"The WTO now expects world merchandise trade volume as measured by the average of exports and imports to grow 2.8 percent in 2015 and 3.9 percent in 2016," it said.

On the export side, it said shipments from developed economies should rise 3 percent this year and 3.9 percent next year.

"Developing economies' exports are expected to grow slower at 2.4 percent in 2015 and 3.8 percent in 2016," it said, adding that imports of developed economies should increase at around the same rate in 2015 (3.1 percent) and in 2016 (3.2 percent), while those of developing economies pick up from 2.5 percent this year to 5.2 percent next year.