Escalating trade tensions and tighter credit market conditions in important markets will slow trade growth for the rest of 2018 and in 2019, according to World Trade Organization economists. Trade will continue to expand, but at a more moderate pace than previous forecasts.
Namely, WTO anticipates growth in merchandise trade volume of 3.9% in 2018, with trade expansion slowing further to 3.7% in 2019. The new forecast for 2018 is below the WTO’s 12 April estimate of 4.4%, but falls within the 3.1% to 5.5% growth range indicated at that time. Trade growth in 2018 is now most likely to fall within a range from 3.4% to 4.4%.
Key points
- World merchandise trade volume is forecast to grow 3.9% in 2018, accompanied by global GDP growth of 3.1% at market exchange rates.
- Trade volume growth should slow to 3.7% in 2019 as global GDP growth dips to 2.9%.
- Rising trade tensions pose the biggest risk to the forecast, but monetary policy tightening and associated financial volatility could also destabilize trade and output.
- Trade-related indicators show a loss of momentum, including global export orders and economic policy uncertainty.
- North America had the fastest export growth and Asia had the strongest import growth in the first half of 2018 while resource-based economies still struggled.
WTO Director General, Roberto Azevêdo, said:
While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners. More than ever, it is critical for governments to work through their differences and show restraint.
- In the first half of 2018, world merchandise trade was up 3.8% compared to the same period in the previous year.
- Exports of developed economies rose 3.5% during the same period while shipments from developing economies increased by 3.6%.
- On the import side, developed economies recorded year-on-year growth of 3.5% in the first half of 2018 while developing countries registered an increase of 4.9%.
- Imports of developed economies have generally been flat in 2018 while exports of developing economies plateaued similarly.
- All geographical regions recorded positive year-on-year trade growth in both exports and imports in the first half of 2018, but some regions performed better than others:
-North America saw the fastest export growth during this period at 4.8%, followed by Asia at 4.2% and Europe at 2.8%.
-Exports of Other regions (comprising Africa, the Middle East and the Commonwealth of Independent States including associate and former member States) increased by 2.7% while those of South America were up 1.1%.
-Asia had the fastest import growth (6.1%) followed by South America (5.5%), North America (4.8%), Europe (2.9%) and Other regions (0.5%). - Prices of energy commodities including oil have risen 33% for the year-to-date through August compared to last year, boosting export revenues of commodity exporters. This has not yet translated into strong import demand in resource-rich regions, as one might expect. Meanwhile the US dollar has appreciated by 8.4% in real effective terms since January of 2018.
