Global trade forecast to pick up but uncertainties linger

GENEVA – The World Trade Organization is predicting an uptick in global trade this year and next after a lacklustre 2016, while cautioning that uncertainty about policies like protectionism and anti-globalization present risks to its forecast.

The Geneva-based trade body, which has faced rumblings that the Trump administration might move to withdraw the United States, is projecting trade growth of 2.4 per cent this year, from 1.3 per cent in 2016, which was the slowest pace since the height of the financial crisis in 2008.

Uncertainty over global trade is particularly high. For this year’s forecast, WTO Director-General Roberto Azevedo set a range of between 1.8 per cent and 3.6 per cent depending on factors including the interest rate environment, fiscal policy, the results of upcoming elections, and the level of appetite for more protectionist or anti-globalization policies.

WTO’s expected range for trade growth next year 2018 runs from 2.1 per cent to 4 per cent.

Azevedo said the WTO was hoping for greater stability in the world economy, and alluded to lingering uncertainty about trade policy in the United States, the world’s largest economy, under the administration of President Donald Trump.

“We are still waiting to see how the trade policy itself is going to shape up in the United States,” Azevedo said. He said the WTO is waiting for a U.S. trade representative to be to be confirmed, “so we can have a more meaningful dialogue” with the United States.

The Trump administration has nominated Robert Lighthizer to become USTR.

Azevedo said the “poor performance” in world trade growth last year was mostly due to a “significant slowdown in emerging markets, where imports basically stagnated last year.” A drop in commodity prices partially doused demand in those markets.

Azevedo did note some bright spots.

“A number of early indicators points to a recovery in trade growth in 2017, for example, container port throughput has climbed to a record high … figures on global export orders are at their highest level in several years,” he said.

“These factors combined with an expected recovery in global GDP gives cause for a cautious optimism,” he said.