WTO lowers world trade growth estimate to 2.8% in 2015; Asia forecast cut sharply to 3.1%

Shreerupa Mitra

The Geneva-based World Trade Organization (WTO) has lowered its estimate for world trade growth by 0.5 percent and 0.1 percent for 2015 and 2016 respectively thus clouding the outlook for the world economy in 2015 and beyond.

WTO’s last estimate that came in April this year has been revised today–world merchandise trade volume is expected to rise 2.8 percent in 2015, down from the previous estimate of 3.3 percent, and to 3.9 percent in 2016, down slightly from the last estimate of 4 percent.

The strongest downward revision to the previous export forecast for 2015, however, has been for Asia where WTO lowered its estimate for exports from 5.0 percent in April to 3.1 percent–this has been attributed mostly to the slowdown in the Chinese economy as intra-regional trade as a consequence has fallen. The downward revision for Asia on the import side was even stronger– from 5.1 percent to 2.6 percent–partly due to lower Chinese imports.

The trade volume for exports in Asia in 2016 is projected to go up to 5.4 percent and for imports to 4.3 percent. India’s merchandise exports fell from 2014 to about $20.1 billion in August 2015 while imports also fell to about $33 billion in August 2015.

These revisions, according to the world trade body, 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.

The financial instability stemming from eventual interest rate rises in the United States and costs associated with the migration crisis in Europe have also been cited by the WTO for its revised estimate. Even though world trade growth would pick up to 3.9 percent from 2.8 percent in 2016, the forecast is still below the average rate between 1995 and 2015 of 5 percent.

The year 2015 will mark the fourth consecutive year—if the predictions of the WTO are accurate—where the annual trade growth has fallen below 3 percent and where trade has grown at the same rate as the world GDP instead of twice as fast like 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," Director-General of WTO Roberto Azevêdo said.

The writer is a journalist with United Nations Office at Geneva and World Trade Organization