The World Trade Organization (WTO) on Monday forecast growth in global goods trade in 2014 at 4.7%, more than double the 2.1% jump last year, but still below the last 20-year average of 5.3%. For the past two years, growth has averaged only 2.2%.
The sluggish pace of trade growth in 2013, the WTO said, was due to a combination of flat import demand in developed economies ( 0.2%) and moderate import growth in developing economies (4.4%). On the export side, both developed and developing economies only managed to record small, positive increases (1.5% for developed economies, 3.3% for developing economies).
?For the last two years, trade growth has been sluggish. If GDP forecasts hold true, we expect a broad-based but modest upturn in the volume of world trade in 2014 and further consolidation of this growth in 2015,? WTO director-general Roberto Azevedo said.
Although the 2014 forecast represents a brighter picture than the 4.5% growth that the WTO expected at the time of its last forecast in September, it is still gloomier than its predictions a year ago because the European Union’s economic recovery took longer to materialise than expected. The dollar value of world merchandise exports in 2013 was $18.8 trillion, 2% higher than in 2012.
The preliminary estimate of 2.1% for world trade growth in 2013 refers to the average of merchandise exports and imports in volume terms that is adjusted to account for differences in inflation and exchange rates across countries. This figure is slightly lower than the WTO?s most recent forecast of 2.5% for 2013, issued last September. The main reason for the divergence was a stronger than expected decline in developing economies? trade flows in the second half of last year. For the second consecutive year, world trade has grown at roughly the same rate as world GDP.
The rise in financial market volatility was most keenly felt in emerging markets with large current account deficits. This is especially true of India, where output growth see-sawed from 2.6% in the second quarter to 7.2% in the third, then back to 3.9% in the fourth
Asia?s exports grew faster than any other region?s last year, with a 4.6% rise. Meanwhile, exports of China and India increased by 7.7% and 6.7%, respectively.
India suffered a sharp drop of 2.9% in its imports as a result of its economic slowdown, but China?s purchases from abroad jumped nearly 10%.
The WTO also cautioned that developing economies like India are now the focus of several gathering risks including large current account deficits.