PRESS/840

1 October 2019

(19-6264) Page: 1/7

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11:00 GENEVA TIME 1 OCTOBER 2019

TRADE STATISTICS AND OUTLOOK

WTO lowers trade forecast as tensions unsettle global economy

Escalating trade tensions and a slowing global economy have led WTO economists to sharply
downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes
are now expected to rise by only 1.2% in 2019,
substantially slower than the 2.6% growth forecast
in April. The projected increase in 2020 is now
2.7%, down from 3.0% previously. The economists
caution that downside risks remain high and that
the 2020 projection depends on a return to more
normal trade relations.
“The darkening outlook for trade is discouraging
but not unexpected. Beyond their direct effects,
trade conflicts heighten uncertainty, which is
leading some businesses to delay the productivity-
enhancing investments that are essential to raising
living standards," said WTO Director-General
Roberto Azevêdo. "Job creation may also be
hampered as firms employ fewer workers to
produce goods and services for export."
"Resolving trade disagreements would allow WTO
members to avoid such costs," the WTO Director-
General added. "The multilateral trading system
remains the most important global forum for
settling differences and providing solutions for the
challenges of the 21st century global economy.
Members should work together in a spirit of
cooperation to reform the WTO and make it even
stronger and more effective.”
The updated trade forecast is based on consensus
estimates of world GDP growth of 2.3% at market
MAIN POINTS
• World merchandise trade volume
is forecast to grow 1.2% in 2019.
This is substantially below the 2.6%
trade growth that had been projected
in April.
• Trade volume growth should
accelerate slightly to 2.7% in 2020
while global GDP growth holds steady
at 2.3% (at market exchange rates), but
this depends on an easing of trade
tensions.
• Trade conflicts pose the biggest
downside risk to the forecast but
macroeconomic shocks and financial
volatility are also potential triggers for a
steeper downturn.
• Trade-related indicators signal a
worrying trajectory for world trade
based on global export orders and
economic policy uncertainty.
• Export and import growth slowed
across all regions and at all levels of
development in the first half of 2019.
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exchange rates for both 2019 and 2020, down from 2.6% previously. Slowing economic growth is
partly due to rising trade tensions but also reflects country-specific cyclical and structural factors,
including the shifting monetary policy stance in developed economies and Brexit-related
uncertainty in the European Union. Macroeconomic risks are firmly tilted to the downside.

Due to the high degree of uncertainty associated with trade forecasts under current conditions, the
estimated growth rate for world trade in 2019 is placed within a range of 0.5% to 1.6%. Trade
growth could fall below this range if trade tensions continue to build, or outperform it if they start
to recede. The range of likely values is wider for 2020, ranging from 1.7% to 3.7%, with better
outcomes depending on an easing of trade tensions.

Risks to the forecast are heavily weighted to the downside and dominated by trade policy. Further
rounds of tariffs and retaliation could produce a destructive cycle of recrimination. Shifting
monetary and fiscal policies could destabilize volatile financial markets. A sharper slowing of the
global economy could produce an even bigger downturn in trade. Finally, a disorderly Brexit could
have a significant regional impact, mostly confined to Europe.

Chart 1: World merchandise exports and imports by level of development, 2012Q1-

2019Q2
Volume index, 2012Q1=100

Exports Imports
130 130

125 125

120 120

115 115

110 110

105 105

100 100

95 95

90 90
2017Q3

2018Q1

2018Q3

2019Q1
2012Q1

2012Q3

2013Q1

2013Q3

2014Q1

2014Q3

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

2017Q3

2018Q1

2018Q3

2019Q1

2012Q1

2012Q3

2013Q1

2013Q3

2014Q1

2014Q3

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

World Developed Developing World Developed Developing

Source: WTO and UNCTAD.

Charts 1 and 2 show quarterly merchandise export and import volumes on a seasonally-adjusted
basis by level of development and geographic region. In the first half of 2019, world merchandise
trade was up 0.6% compared to the same period in the previous year. This marks a substantial
slowdown compared to recent years. Exports of developed economies were up just 0.2% for the
year-to-date, while those of developing economies were up 1.3%. On the import side, developed
economies recorded year-on-year growth of 1.1% while developing countries declined by 0.4%.
Growth rates based on quarterly data may differ slightly from calculations based on annual
statistics, but they should be of similar magnitude.
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Chart 2: Merchandise exports and imports by region, 2012Q1-2019Q2

Volume index, 2012Q1=100

Exports Imports
140 140

130 130

120 120

110 110

100 100

90 90

80 80
2012Q1

2012Q3

2013Q1

2013Q3

2014Q1

2014Q3

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

2017Q3

2018Q1

2018Q3

2019Q1

2012Q1

2012Q3

2013Q1

2013Q3

2014Q1

2014Q3

2015Q1

2015Q3

2016Q1

2016Q3

2017Q1

2017Q3

2018Q1

2018Q3

2019Q1
North America South America¹ Europe North America South America¹ Europe
Asia Other regions² Asia Other regions²

1 Refers to South and Central America and the Caribbean.

2 Other regions comprise Africa, Middle East and the Commonwealth of Independent States, including
associate and former member States.
Source: WTO and UNCTAD.

All geographical regions recorded positive year-on-year export growth in the first half of 2019
despite a substantial weakening of global demand. North America had the fastest export growth of
any region at 1.4%, followed by South America at 1.3%, Europe at 0.7%, Asia at 0.7%, and Other
regions (comprising Africa, the Middle East and the Commonwealth of Independent States,
including associate and former member States) at 0.1%.

North America recorded the fastest import growth of any single region at 1.8%, followed by
Europe at 0.2%. Two regions registered declines (South America at -0.7% and Asia at -0.4%).
Collectively, the imports of Other regions grew faster than those of North America, at 2.4%.
Import demand has been particularly weak in Asia, weighing heavily on exporters of manufactured
goods (e.g. Japan, Korea, and Germany). Exporters of natural resources have also seen demand
for their products weaken, as evidenced by the 12% year-on-year decline in commodity prices in
August.

There are no comprehensive statistics on services trade in volume terms due to the general
unavailability of price data, but an approximate measure of services trade volume can be derived
by adjusting nominal commercial services trade statistics to account for exchange rates and
inflation. This index shows that, like merchandise trade, commercial services trade has plateaued
recently (Chart 3).
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Chart 3: World services trade activity index, 2015Q1 – 2019Q2

Index, 2015=100

120

115

110

105

100

95

90

2017Q4

2018Q2
2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2018Q1

2018Q3

2018Q4

2019Q1

2019Q2
Source: WTO and UNCTAD, United States Federal Reserve, Bank for International Settlements and
Secretariat calculations.

Monthly economic indicators provide some worrying clues about the current and future trajectory
of world trade. An index of new export orders derived from purchasing managers' indices has
fallen from 54.0 in January 2018 to 47.5 in August 2019, the weakest reading since October 2012
(Chart 4). Note that values below 50.0 signal contraction.

Chart 4: Global PMI new export orders index, Jan. 2010 – Aug. 2019
Index, base=50

60

55

50

47.5
45

40
2018M01
2010M01
2010M07
2011M01
2011M07
2012M01
2012M07
2013M01
2013M07
2014M01
2014M07
2015M01
2015M07
2016M01
2016M07
2017M01
2017M07

2018M07
2019M01
2019M07

Note: Values greater than 50 indicate expansion while values less than 50 denote contraction.
Source: IHS Markit.

A separate indicator based on the frequency of phrases in press reports captures aspects of
monetary, fiscal and trade policy uncertainty (Chart 5). In 2019, the index has risen from 289 in
January to 348 in August, its highest level ever. To the extent that economic uncertainty deters
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investment, it can have a disproportionately negative effect on trade since capital goods that make
up investments tend to have high import content.

Chart 5: Global economic policy uncertainty, Jan. 2005 – Aug. 2019

(index, average 1997-2015=100)

400
348.0
350
304.7
300

250 212.7
199.0
200

150

100
113.3
50

0
2009M07

2016M07
2005M01
2005M07
2006M01
2006M07
2007M01
2007M07
2008M01
2008M07
2009M01

2010M01
2010M07
2011M01
2011M07
2012M01
2012M07
2013M01
2013M07
2014M01
2014M07
2015M01
2015M07
2016M01

2017M01
2017M07
2018M01
2018M07
2019M01
2019M07
Source: PolicyUncertainty.com.

Monthly merchandise trade values in current US dollar terms are shown for selected economies in
Chart 6 below. Some countries (e.g. the United States and China) may show signs of a turnaround
while others (the Republic of Korea and Japan) provide no such indication. Nominal trade statistics
are strongly influenced by prices and exchange rates, so these trends should be interpreted with
caution.

If current GDP estimates are realised, the volume of world merchandise trade should increase by
1.2% in 2019 (Table 1), but this would require a degree of recovery in the second half of the year.
Monetary easing in developed countries has not had a major impact to date but is likely to be felt
toward the end of 2019 and into 2020. Other measures, including fiscal policies for surplus
countries, are being undertaken to stem the current slowdown. These measures could provide
some upside potential to the forecast, especially if outstanding trade disputes are resolved.
However, the balance of risk remains on the downside, with trade disputes, financial volatility and
geopolitical tensions providing potential triggers for a steeper downturn.
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Table 1: Merchandise trade volume and real GDP, 2015-20201

Annual % change

2015 2016 2017 2018 2019P 2020P

Volume of world merchandise trade 2 2.3 1.7 4.6 3.0 1.2 2.7
Exports
Developed economies 2.4 1.0 3.6 2.1 0.4 2.2
3
Developing economies 1.7 2.3 5.6 3.5 2.1 3.4
North America 1.1 0.3 4.2 4.3 1.5 3.6
4
South and Central America -0.4 0.7 3.0 0.6 1.3 0.7
Europe 2.9 1.2 3.7 1.6 0.6 1.7
Asia 1.4 2.3 6.8 3.8 1.8 3.8
5
Other regions 3.2 2.9 1.6 2.7 0.9 2.5
Imports
Developed economies 4.2 2.0 3.3 2.5 1.6 1.2
Developing economies 3 0.6 1.3 6.8 4.1 1.1 4.3
North America 5.4 0.1 4.0 5.0 2.9 2.1
4
South and Central America -8.4 -8.8 4.6 5.2 -0.7 4.5
Europe 3.5 3.1 2.9 1.1 0.4 0.9
Asia 3.9 3.6 8.3 5.0 1.3 3.9
5
Other regions -4.3 -1.9 2.5 0.5 2.6 4.3

Real GDP at market exchange rates 2.8 2.4 3.0 2.8 2.3 2.3
Developed economies 2.3 1.6 2.3 2.2 1.7 1.4
3
Developing economies 3.7 3.8 4.3 4.1 3.4 3.8
North America 2.7 1.6 2.3 2.7 2.2 1.9
South and Central America 4 -0.8 -2.0 0.7 0.6 0.1 2.4
Europe 2.4 2.0 2.7 2.0 1.3 1.2
Asia 4.3 4.2 4.6 4.2 3.9 3.5
5
Other regions 1.2 2.4 2.0 2.2 1.7 2.4

1 Figures for 2019 and 2020 are projections.

2 Average of exports and imports.
3 Includes the Commonwealth of Independent States (CIS), including associate and former member
States.
4 Refers to South and Central America and the Caribbean.
5 Other regions comprise Africa, Middle East and Commonwealth of Independent States (CIS).
Source: WTO and UNCTAD for trade, consensus estimates for GDP.
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Chart
Chart 5 6: Merchandise exports and imports of selected economies, January 2014-July
2019
Merchandise exports and imports of selected economies, January 2014-July 2019
(Billion dollars)
(Billion dollars)

United States European Union (extra-trade)

300 250

250
200

200
150
150

100
100

Exports 50 Exports
50
Imports Imports

0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

Japan Republic of Korea

100 60

50
80

40
60
30
40
20

Exports Exports
20
10
Imports Imports

0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

Brazil China
25 250

20 200

15 150

10 100

5 Exports 50 Exports

Imports Imports

0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

India Russian Federation

50 50
45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 Exports 10 Exports

5 Imports 5 Imports

0 0
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019

Source: IMF International

Sources: IMF International Financial
Financial Statistics, Global TradeStatistics, Global
Information Services GTA Trade
database,Information
national statistics. Services GTA database, national
statistics.

END