WTO raises 2017 growth forecast as global trade accelerates

Previously set at 2.4 percent, the world trade forecast has been increased to 3.6 percent due to strong North American imports and Asian export recovery, according to the World Trade Organization.    The World Trade Organization (WTO) has upgraded its estimate for growth in world merchandise trade volume in 2017 to 3.6 percent, up from the previous estimate of 2.4 percent.
   The WTO noted, however, that the previous estimate was set within a range of 1.8 percent to 3.6 percent, “reflecting the high level of economic and policy uncertainty.” The estimate range for global trade growth has been adjusted to between 3.2 percent and 3.9 percent.
   Even at the lower end of the expected range, 3.2 percent growth would represent a stark improvement over the 1.3 percent increase in 2016.
   According to the WTO, the adjusted estimate is due to the recovery of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016.
   “The improved outlook for trade is welcome news, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” warned Director-General Roberto Azevêdo. “These risks include the possibility that protectionist rhetoric translates into trade restrictive actions, a worrying rise in global geopolitical tensions and a rising economic toll from natural disasters. Though difficult to quantify, these risks are very real. As a result, increased optimism about trade should be tempered with a healthy dose of caution.
   “On the other hand, the fact that trade growth is now more synchronized across regions than it has been for many years could make the current expansion self-reinforcing,” he added. “Such a positive outcome would be more likely if countries continue to resist the temptations of protectionism and work together with their partners in the multilateral system to ensure that gains from trade are both large and widely shared.”
   The WTO found that GDP growth accelerated in China and the U.S. during the second quarter, which boosted demand for imports, in turn spurring intra-Asia trade.
   In addition, oil prices have recovered substantially in 2017, leading to “an outsized impact on import demand,” according to the WTO report.
   The organization noted, however, that the current growth pace is unlikely to be sustained next year due to potentially tightened monetary policies, particularly in China and the European Union. As a result, the WTO predicts a moderate rise in global trade of 3.2 percent in 2018, with a full estimate range of 1.4 percent to 4.4 percent.