Global trade forecast to pick up
- Author: Zachary Reyes Apr 13, 2017,
Apr 13, 2017, 21:38
Attaining these rates of growth depends to a large degree on global GDP expansion in line with forecasts of 2.7% this year and 2.8% next year.
"Overall I think that while there are some reasons for cautious optimism, trade growth remains fragile and there are considerable risks on the downside".
"The WTO is forecasting that global trade will expand by 2.4% in 2017; however, as deep uncertainty about near-term economic and policy developments raise the forecast risk, this figure is placed within a range of 1.8% to 3.6%", the organization said in its projections.
But the good news comes with a caveat: the recovery will be much weaker if President Trump's America First and other protectionist polices are adopted, the WTO warned.
But citing "deep uncertainty" about economic and policy developments, particularly in the US, it said growth could range between 1.8% and 3.6%.
"Getting over the election cycles is important particularly in the major economies so we have a clear view of what is coming, what the policies are".
Surprise! Global trade is bouncing back after a sharp slowdown previous year.
But he warned: "If policymakers attempt to address job losses at home with severe restrictions on imports, trade can not help boost growth and may even constitute a drag on the recovery".
Trump has made reducing US trade deficits a key focus of his economic agenda to try to grow American manufacturing jobs. "We are still waiting to see how the trade policy itself is going to shape up in the United States". The most trade-intensive components of global demand were particularly weak past year as investment spending slumped in the United States and as China continued to rebalance its economy away from investment and toward consumption, dampening import demand. "Predictability is extremely important for investments and economic growth".
Trade is a key measure of the health of the global economy, which it both stimulates and reflects. Governments should address economic issues at home by improving education, training and social programs to help the jobless compete for work, rather than reining in trade, it said.
The chiefs of the International Monetary Fund, World Trade Organisation (WTO) and Organisation for Economic Co-operation and Development vowed in a joint statement to defend free trade against creeping protectionist trends.
A broad upswing in manufacturing activity in the USA and other rich economies, stronger growth in developing economies and the benefits of higher commodity prices for low-income countries were all contributing to stronger global growth, the IMF's managing director said.
In 2016, the weak trade growth of just 1.3% was partly due to cyclical factors as economic activity slowed across the board.