WTO Expects Global Trade to Grow 4.7% in 2014, After 2.1% Expansion in 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--The World Trade Organization (WTO) expects that global trade will expand 4.7% this year because of positive developments in the eurozone and the U.S. The WTO said that it did not expect growth to return to the historical trend of 5.3% until 2015.

"If GDP [gross domestic product] forecasts hold true, we expect a broad-based but modest upturn in the volume of world trade in 2014, and further consolidation of this growth in 2015," WTO Director-General Roberto Azevedo said in a news conference in Geneva.

"For 2014, world trade should rise 4.7%," Azevado said. "And this is not yet quite at the historical average, but it is better than last year. It would definitely be a step in the right direction."

For this year, the WTO pointed to positive trends in Western countries and noted that the eurozone crisis had become much less of a risk. The trade forecast for 2014 is premised on an assumption of 3% growth in world GDP at market exchange rates, while the forecast for 2015 assumes output growth of 3.1%.

"World trade growth in 2013 slowed to just 2.1% in real volume terms again, confirming of course the scenario that we had outlined of subdued trade growth," Azevado said.

Asia Takes the Lead, with Risks on Horizon
The WTO sees that the world trade is gathering steam from Asian countries. "We see Asia leading all other geographic regions, in terms of export growth and import growth next year, their growth is still pretty modest by historic standards. For instance, Asia's exports are expected to grow 6.9% in 2014, whereas the average over the last 20 years, including the recent slow years, is 8.6%," WTO Economist Coleman Nee said.

Developing economies are the focus of several gathering risks, including large current account deficits (such as in India and Turkey), currency crises (Argentina), over-investment in production capacity, and re-balancing economies to rely more on domestic consumption and less on external demand. Geopolitical risks have introduced an additional element of uncertainty to the forecast.

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