São Paulo – Global trade should end 2016 with an expansion of 1.7% over the previous year, meaning the slowest growing pace since the start of the world economic crisis of 2008. According to the report “Trade Statistics and Outlook” released this Tuesday (27) released this Tuesday (27) by the World Trade Organization (WTO), one of the reasons for the decline in the merchandise trade volumes is the contraction in developing economies, especially Brazil and China.
The report reviewed the forecasts made by the organization in April. At the time, WTO’s estimates indicated that global trade would grow 2.8% and this number was revised down to 1.7%. For 2017, the previous forecast expected an expansion of 3.6% of global trade, however it was revised down to between 1.8% to 3.1%. The WTO expects the global Gross Domestic Product (GDP) to reach 2.2%, the lowest since the crisis.
One of the reasons that took the WTO to revise down its projections was the performance of trade in the first two quarters of the year. From January to March, merchandise trade volumes dropped 1.1% in comparison to the same period of last year, a much sharper decline than expected. Meanwhile, the rebound of 0.3% in Q2 was smaller than anticipated.
“The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalization sentiment. We need to make sure that this does not translate into misguided policies that could make the situation much worse, not only from the perspective of trade but also for job creation and economic growth and development which are so closely linked to an open trading system”, said WTO director general, Roberto Azevêdo.
WTO warns that the world needs a large trade network between the countries, since among the benefits is the inclusion of poorer countries in the global supply chain, as well as small entrepreneurs, companies and “marginalized groups” in all economies. “While the benefits of trade are clear, it is also clear that they need to be shared more widely”, says the WTO.
WTO attributes the deceleration in part to the developing countries, especially Brazil. When comparing the country’s exports for the month of August, it exported approximately USD 22 billion in 2014, USD 12 billion in 2015 and USD 11 billion in 2016. Imports declined from USD 21 billion in August 2014 to USD 16 billion last year, and approximately USD 10 billion this year. Russia, India and South Africa, other developing countries, also registered a decline in its trade volumes.
Due to the performance of the Brazilian economy, the WTO expects exports by South and Central America countries to grow by 4.4% this year. Imports, however, will decline 8.3%. In the majority of the regions forecasts indicates a decline in exports, however, South America reversed the trend due to exchange rates favorable to exporters. In general, exports by developed economies should grow 2.1% this year, with imports expanding 2.6%. Developing countries should expand its exports in 1.2%, with imports growing 0.4%.
“The outlook for the remainder of this year and next year is affected by a number of uncertainties, including financial volatility stemming from changes in monetary policy in developed countries, the possibility that growing anti-trade rhetoric will increasingly be reflected in trade policy, and the potential effects of the Brexit vote in the United Kingdom, which has increased uncertainty about future trading arrangements in Europe, a region where trade growth has been relatively strong”, says the document.
*Translated by Sérgio Kakitani
