The World Trade Organization has forecasted a sluggish 2.8 per cent growth in the volume of world trade in 2016, unchanged from the level of increase registered the previous year.
A status quo in world trade does not augur well for India’s export prospects, which have been declining continuously in the past 15 months. The forecast also indicates that Commerce Minister Nirmala Sitharaman’s task to revive India’s sagging export growth by focusing on making special economic zones more business friendly, could be tough as key developed markets is likely to remain sluggish.
A press release issued by WTO today said the imports of developed countries should moderate this year, while demand for imported goods in developing Asian economies should pick up.
“Risks to this forecast are mostly on the downside, including a sharper than expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements,” it stated.
“Trade is still registering positive growth, albeit at a disappointing rate,” WTO Director-General Roberto AzevÃªdo stated. “This will be the fifth consecutive year of trade growth below 3 per cent. Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow.”
According to WTO, a number of steps – from rolling back trade restrictive measures, to implementing the WTO Trade Facilitation Agreement – by member countries can aid trade growth.
The 2015 result marks the fourth consecutive year in which growth in world merchandise trade stayed below 3 per cent on an annual basis. Trade was also unusually volatile over the course of the year, falling in the second quarter in both developed and developing countries before rebounding in the final half.
On the positive side, WTO indicates that global trade could benefit if monetary support from the European Central Bank succeeds in generating faster growth in the euro area during the year. It also states that 2017 could be better as the global trade growth could rise to 3.6 per cent.