São Paulo – The World Trade Organization (WTO) released this Thursday (21) a revision of its global trade growth forecasts for this year and the next. For 2017, the upward revision was significant, an increase from 2.4% from the April forecast to the current forecast of 3.6%.
According to the organization, this stouter forecast is the result especially of a rebound of the intra-regional trade flow in Asia and the warming up of imports in North America, after a scenario of stagnation 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,” said the director-general of WTO, Roberto Azevêdo, according to a statement from the organization. “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,” he added.
There are really tangible risks, given the belligerent and protectionist rhetoric by the president of the United States, Donald Trump, the escalating of tensions between the US and North Korea, Iran and Venezuela, the exit process of the United Kingdom from the European Union and the occurrence of hurricanes in the Caribbean and North America and earthquakes in Mexico.
The revision of the global trade growth forecast for this year considers also the expectations for a sharper growth of the global Gross Domestic Product (GDP), of 2.8% in 2017 against 2.3% in 2016. According to the WTO, there was an acceleration of the GDP in the majority of the main economies in this year’s Q2, with the highlights being China, the United States and the Euro Zone. In the cases of China and the US, it resulted in a boost of imports.
The WTO points out, however, that in 2018 the rhythm of global trade growth should drop to 3.2% due to an expected fiscal adjustment in developed countries and the possibility of some fiscal and credit restriction in China to avoid the country’s economy to heat up too much. Besides, the organization reminds that the 2018 performance won’t go against a weak year, such as the case of 2017 against 2016. Last year, global trade grew only 1.3%.
First half
In 2017’s first half, global trade expanded only 4.2% over the same period of last year, with the developing economies surpassing the rhythm of the developed ones. If the forecasts by the organization come through, the volume of imports and exports of the former ones will exceed the volume of the latter ones. The organization reports, however, that it’s still early to say if this will mark the end of the emerging markets slowdown.
There was an improvement concerning exports and imports in almost all the regions surveyed by the WTO in the first six months, with South America, where there weren’t any significant changes, the exception. “On a bright note, Brazil should see growth in its imports and GDP turn positive in 2017 but South America as a whole will continue to register weak trade and GDP growth,” said the organization’s statement.
In the section “other regions”, which includes Africa, the Middle East and the Commonwealth of Independent States (former USSR), exports remained practically stable, while imports increased 2.5% in the first six months. This took place due to a partial recovery of oil’s prices. Even if prices remain low against the averages of current history, there was an increase of 21.8% in the values against the first six months of 2016. With more revenues coming from oil exports, the producing countries have more resources to import other products.
*Translated by Sérgio Kakitani
