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WTO sees gradual recovery in coming months despite cut in trade - WTO press release

WTO sees gradual recovery in coming months despite cut in trade - WTO press release

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Published by Eduardo Petazze
WTO economists predict 2013 growth of 2.5% (down from the 3.3% forecast in April) and 4.5% in 2014 (down from 5.0%)
WTO economists predict 2013 growth of 2.5% (down from the 3.3% forecast in April) and 4.5% in 2014 (down from 5.0%)

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Published by: Eduardo Petazze on Sep 20, 2013
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06/19/2014

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PRESS RELEASE
PRESS/69419 September 2013(13-0000)
TRADE STATISTICS
WTO sees gradual recovery in coming months despite cut in tradeforecasts
World trade growth in 2013 and 2014 is likely to be slower than previously forecast. WTOeconomists now predict 2013 growth of 2.5% (down from the 3.3% forecast in April), and 4.5% in2014 (down from 5.0%), but they say conditions for improved trade are gradually falling intoplace.The demand for imports in developing economies isreviving but at a slower rate than expected. Thishindered the growth of exports from both developedand developing countries in the first half of 2013 andwas the reason for the lower forecasts, they said.(The April press release is here:www.wto.org/english/news_e/pres13_e/pr688_e.htm.) “There is a message for the WTO in this,” said WTODirector General Roberto Azevêdo. “The past two yearsof sluggish trade growth reinforce the need to makeprogress in the multilateral negotiations. “Although the trade slowdown was mostly caused byadverse macro-economic shocks, there are strongindications that protectionism has also played a partand is now taking new forms which are harder todetect,” he went on. “Fortunately, there is somethingwe can do about this. Negotiations under way inGeneva can address these problems, facilitatinggreater trade and opportunities to spur economicgrowth. “I am encouraged at the level of commitment shownby WTO members. But much hard work remains in thecoming weeks if we are to deliver a successful outcomeat the ministerial conference in Bali,” he said.Some short-term prospects are improving withencouraging data coming from Europe, the US, Japanand China. Reports on private sector activities frompurchasing managers (purchasing managers’ indices,
 
MAIN POINTS
 
World merchandise trade is set togrow 2.5% in 2013
, very close to the2.3% rate seen in 2012.
 
Trade growth should accelerate to4.5% in 2014
, still below the averagerate of 5.4% for the last 20 years(1982-2012).
 
Imports of the EU from the rest of the world fell 2%
in the first half of 2013 compared to the same periodin 2012, hitting the exports of itstrading partners.
 
Imports of Developing economies
 
and CIS
have continued to growstrongly in 2013 (up 5% for the yearto date), partly cushioning the dropin the EU and stagnation in the US.
 
Risks to the forecast are morebalanced than in the past
,
 
sinceworld trade growth could be higherthan forecast if the EU reboundsrelatively quickly from its recession.The most conspicuous downside riskis the phasing out of unconventionalmonetary policy in the US.
 
PRESS/694Page
2
of 8which give some indication about future activity), shipping rates, automobile production and otherleading indicators, suggest that the economic slowdown has bottomed out and that a tentativerecovery is underway. This is expected to be reflected in rising quarterly growth in the monthsahead, WTO economists say.The European sovereign debt crisis has eased significantly since last year, unemployment in theUnited States has fallen to 7.3% from a post-crisis high of 10%, and growth of GDP (grossdomestic product, a measure of a country’s output) in Japan has accelerated since the adoption of new fiscal and monetary policies.Although large developing economies have slowed appreciably in recent months, the latest figuresfrom China on industrial production suggest that the country may be regaining some of itsdynamism. On the other hand, India’s economy is still in the midst of a sharp contractionaccording to composite leading indicators calculated by the Organisation for Economic Cooperationand Development (OECD).However, since the European Union consumes roughly one third of the world’s traded goods(including shipments between member countries within the EU) and the EU unemployment rate islikely to remain at or near record levels for some time, growth in trade can be expected to bebelow average — that is, below the 20-year average of 5.4% — in the coming quarters (Chart 1).
Chart 1 - World merchandise trade volume by level of development, 2010Q1-2013Q4
a
Seasonally adjusted indices, 2005Q1=100a Figures for 2013Q3 and 2013Q4 are projections.Source: WTO Secretariat.
90100110120130140
     2     0     1     0     Q     1     2     0     1     0     Q     2     2     0     1     0     Q     3     2     0     1     0     Q     4     2     0     1     1     Q     1     2     0     1     1     Q     2     2     0     1     1     Q     3     2     0     1     1     Q     4     2     0     1     2     Q     1     2     0     1     2     Q     2     2     0     1     2     Q     3     2     0     1     2     Q     4     2     0     1     3     Q     1     2     0     1     3     Q     2     2     0     1     3     Q     3     2     0     1     3     Q     4
Exports
World Developed Developing and CIS90100110120130140
     2     0     1     0     Q     1     2     0     1     0     Q     2     2     0     1     0     Q     3     2     0     1     0     Q     4     2     0     1     1     Q     1     2     0     1     1     Q     2     2     0     1     1     Q     3     2     0     1     1     Q     4     2     0     1     2     Q     1     2     0     1     2     Q     2     2     0     1     2     Q     3     2     0     1     2     Q     4     2     0     1     3     Q     1     2     0     1     3     Q     2     2     0     1     3     Q     3     2     0     1     3     Q     4
Imports
World Developed Developing and CIS
 Chart 1 shows the quarterly evolution of merchandise trade by level of development since the firstquarter of 2010, with data sourced from the WTO’s short-term trade statistics(www.wto.org/english/res_e/statis_e/short_term_stats_e.htm).The volume of world merchandise trade (i.e., goods trade adjusted to account for changes inprices, exchange rates and seasonal variation) was only up 1.2% in the first half of 2013compared to the same period in 2012. For the forecast of 2.5% growth in world trade to berealized would require a 3.8% year-on-year increase in the second half of 2013, which is feasible.Some of the demand to fuel this growth would undoubtedly come from increased imports indeveloped economies. These dropped 1.6% in the first six months of 2013 and would require a
 
PRESS/694Page
3
of 81.4% rise in the second half just to achieve 0% growth for the year. Whether this happens willdepend mostly on the pace of recovery in the EU.One of the few bright spots on the trade landscape since the European sovereign debt crisis flaredin the middle of 2012 has been the resilience of developing economies’ imports, which havebuoyed exports from other countries. These were up 5.8% year-on-year in the first half of 2013,but this is expected to moderate to around 5.5% in the second half of the year.The fact that imports of developing economies have risen roughly 12% in the last two years whilethose of developed economies have been flat or declining suggests that developing economieshave partly cushioned the drop in developed economy imports. (For the purposes of this analysis, “developing economies” include the Commonwealth of Independent States.)Table 1 summarizes the annual trade forecasts for 2013 and 2014, including consensus estimatesof real GDP at market exchange rates. The WTO currently expects the volume of worldmerchandise trade to grow 2.5% in 2013. On the export side, it expects a 1.5% increase fordeveloped economies and a 3.6% rise for developing economies.
Table 1: World merchandise trade and GDP, 2009-2014
a
Annual % change
20092010201120122013P2014PVolume of world merchandise trade
b
-12.513.85.42.32.54.5ExportsDeveloped economies-15.213.35.11.11.52.8Developing economies and CIS-7.815.05.93.83.66.3ImportsDeveloped economies-14.310.73.20.0-0.13.2Developing economies and CIS-10.618.28.14.95.86.2Real GDP at market exchange rates-2.43.82.42.02.02.6Developed economies-3.82.71.51.21.21.9Developing economies and CIS2.17.45.54.74.54.9a Figures for 2013 and 2014 are projections.b Average of exports and imports.Source: WTO Secretariat for trade, consensus estimates of economic forecasters for GDP.
 On the import side, the WTO is forecasting stagnant growth of –0.1% for developed countries anda more robust 5.8% increase for developing economies.In 2014, world trade is expected to advance 4.5%, with exports of developed economies climbing2.8% and those of developing countries increasing 6.3%. Imports of developed economies areprojected to grow 3.2% in 2014 while those of developing economies should expand by 6.2%.The revised trade forecasts are accompanied by a slight downward revision in the GDP estimatescompared to the April release (from 2.1% to 2.0% in 2013, and from 2.7% to 2.6% in 2014). GDPfigures refer to output at market exchange rates and are generally smaller than the equivalentfigures measured at purchasing power parity (PPP).

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