WTO Forecasts World Trade to Grow 2.4% in 2017

world trade

In its latest trade statistics and outlook report, the World Trade Organization (WTO) forecasts the world merchandise trade volume to grow within a range of 1.8-3.6% in 2017 (on average 2.4%). This growth rate is slightly up from a very weak growth of 1.3% in 2016. WTO expects trade growth to further pick up to 2.1-4% in 2018.

On the positive side, the global GDP growth is expected to rebound to 2.7% in 2017 from 2.3% in 2016, which will contribute to the expansion of world trade. Notably, WTO expects emerging economies to return to modest economic growth in 2017. However, WTO sees policy uncertainty, including the imposition of restrictive trade measures and monetary tightening, a main risk factor to world trade this year.

wto

WTO also noted that since the financial crisis, the ratio of trade growth to GDP growth has fallen to around 1:1. And 2016 marked the first time since 2001 that this ratio has dropped below 1, to a ratio of 0.6:1. Historically, the volume of world merchandise trade has tended to grow about 1.5 times faster than world output. WTO is cautiously optimistic that the ratio will partly recover in 2017, but the ratio will remain a cause for concern.

At the press conference, Trump Administration’s trade policy receives significant attention. But according to  Roberto Azevêdo, Director-General of WTO, “just an overall statement of the intention to go one particular way or another, does not tell us what the trade policy is and does not tell us what the impact of that trade policy will be. Instead, the devil is in the details”. Roberto said he is waiting to see Trump’s new trade team in place (for example, the new US Trade Representative) and he looks forward to the meaningful dialogues with the team to know more details and clarity of U.S. trade policy. Until then, any comments on the impact of Trump Administration’s trade policy would be just speculations.

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Author: Sheng Lu

Professor @ University of Delaware

2 thoughts on “WTO Forecasts World Trade to Grow 2.4% in 2017”

  1. A growth of trade can only mean good things for the participating countries. It’s interesting to me, with the TPP being in the “freezer” that the WTO expects a growth in trade. The U.S. is a key player in the trade market because the U.S. has the highest GPD in the world. Therefore, not having the U.S. involved with the TPP at this stage is a loss on the market. I wonder why there is a rather large growth rate predicted for a year where the U.S. plans to be participating less in trade, according to President Trump. I am excited to see what the numbers look like at the end of 2017 and how the prediction will be adjusted for 2018, if at all.

    1. Great question! WTO forecasts a slightly higher growth rate of global trade volume this year because of the gradual recovery of the global economy. GDP is still one of the most effective indicators measuring trade growth. WTO did acknowledge that public uncertainty may affect trade in a negative way. Reporters asked many questions about Trump’s trade policy during the Q&A session.

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