GENEVA • World trade will grow by 2.8 per cent this year and could be pegged back further by a United States interest rate rise, China's economic slowdown or Europe's refugee crisis, the World Trade Organisation (WTO) said yesterday.
The forecast, revised down from a 3.3 per cent forecast made in April, means 2015 will be the fourth year in a row with trade growth of less than 3 per cent, half the annual average from 1990 to 2008 before the financial crisis hit.
The WTO's forecast implies that growth will quicken this year, from 2.5 per cent growth last year. However, its expectations have repeatedly proved overly optimistic as hopes of global economic recovery have receded. There were still big potential risks to its latest numbers.
"These include a sharper than expected slowdown in emerging and developing economies, the possibility of destabilising financial flows from an eventual interest rate rise by the US Federal Reserve, and unanticipated costs associated with the migration crisis in Europe," the WTO said in a statement.
The Chinese slowdown already caused the WTO to cut this year's forecast for growth in Asian imports to 2.6 per cent, down from a 5.1 per cent projection in April, and Asian exports to 3.1 per cent from the previous 5 per cent forecast.
China's falling demand was one major reason why global trade shrank in the first two quarters of this year, contracting from the previous quarter by an average of 0.7 per cent. Falling demand in Brazil, and oil and commodity prices also contributed.
However, year-on-year global growth for the year to date is still positive, at 2.3 per cent from the same period of 2014.
Next year, world trade is expected to grow by 3.9 per cent, a revision of the WTO's previous forecast of 4 per cent.
That rebound is predicated on Asian import growth bouncing back from 2.6 per cent this year to 4.3 per cent, as well as Latin America flipping from a 5.6 per cent import contraction this year to 5.7 per cent import growth next year.
The WTO forecasts covered trade in goods, but not trade in services.
"Trade can act as a catalyst for economic growth. At a time of great uncertainty, increased trade could help reinvigorate the global economy and lift prospects for development and poverty alleviation," WTO director-general Roberto Azevedo observed.