Trade growth in 2017 has been revised upward by the World Trade Organization (WTO), as stronger-than-expected growth in Asia and recovering import demand in North America drove a sharply accelerated global economy in the first half of the year.
World merchandise trade volume is now forecast to grow 3.6% in 2017, placed within a range from 3.2% to 3.9%, accompanied by global GDP growth of 2.8% at market exchange rates. The previous estimate for 2017 was 2.4%, set within a range of 1.8%-3.6%, reflecting the high level of economic and policy uncertainty.
Growth of 3.6% would represent a substantial improvement on the lackluster 1.3% increase in 2016, WTO said.
“Stronger growth in 2017 was attributed to a resurgence of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016,” said WTO.
“The improved outlook for trade is welcome news, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery,” WTO director-general Roberto Azevêdo said. “These risks include the possibility that protectionist rhetoric translates into trade restrictive actions, a worrying rise in global geopolitical tensions and a rising economic toll from natural disasters.”
GDP growth accelerated in most major economies in the second quarter, most notably in China, the United States, and the euro area.
Stronger growth particularly in China and the United States boosted demand for imports, which spurred intra-Asia trade as demand was transmitted through regional supply chains. Financial conditions in Asia also improved compared to the volatile first quarter of 2016, contributing to business and consumer confidence.
The rapid pace of trade growth in 2017 is unlikely to be sustained next year as expansion is expected to moderate to around 3.2% in 2018, within a range from 1.4% to 4.4%, as global GDP growth remains stable at 2.8%.
World trade rose 4.2% year-on-year in the first half of 2017 compared to the same period in the previous year. Developed economies’ exports were up 3.1% over the same period while those of developing economies were up 5.9%. Meanwhile, imports were up 2.1% in developed countries and 6.9% in developing economies in the first half of the year.
Exports and imports were up in the first half of 2017 compared to the same period last year in all regions except for South America, where trade was essentially flat.
Exports of Asia rose 7.3% while the region’s imports jumped 8.9% thanks in large part to strong increases in China.
North American exports and imports were up 4.9% and 3.9% year-on-year during this period. Exports of South America were down 0.7% while imports were up 1.0%. In Europe, exports grew 2.6% while imports rose 1.2%.
“Other regions,” comprised of Africa, the Middle East, and the CIS region, saw flat export growth of 0.1% in volume terms as demand for oil and other natural resources tends to be very stable.
“If these estimates are realized, 2017 will see developing economies outpace developed economies in trade volume growth on both the export and import sides. It will also be the first year since 2013 in which imports of developing economies will have grown faster than those of developed countries,” said the WTO.
The biggest upgrades in trade growth for 2017 were for Asia, which should see its exports and imports advance to 7.0% and 6.7%, respectively, in 2017.
For North America, trade growth has been pushed upward on both the export side and import side, while estimates have been scaled back for European exports and imports in 2017.
Risks to the forecast are firmly tilted to the downside, and include trade policy measures, monetary tightening, geopolitical tensions, and costly natural disasters.
Photo: Anna Frodesiak
