WTO latest organisation to cut global growth view
Published 01/10/2015 | 02:30
The World Trade Organisation has become the latest global agency to cut its forecast for global growth.
Fears over China's slowdown, the impact of a US interest rate rise and the European refugee crisis are all named as risks that the latest prediction could be cut further.
World trade will grow by 2.8pc this year and could be pegged back further by a US interest rate rise, China's economic slowdown, inset, or Europe's refugee crisis, the World Trade Organization said yesterday.
The Irish economy is pegged to grow by 6pc to 7pc this year, and those figures have been revised up since the start of the year - bucking the global trend.
That is in part because of a catch-up effect as the economy here rebounds from a crash that was deeper and longer than most countries endured following the global recession.
But the WTO forecast, revised down from a 3.3pc forecast made in April, means 2015 will be the fourth year in a row with trade growth of less than 3pc, half the annual average in 1990-2008 before the financial crisis hit.
The WTO's forecast implies that growth will acelerate this year, up from 2.5pc growth in 2014. But its expectations have repeatedly proved overly optimistic as hopes of global economic recovery have receded.
There are still big potential risks to its latest numbers.
"These include a sharper-than-expected slowdown in emerging and developing economies, the possibility of destabilising financial flows from an eventual interest rate rise by the US Federal Reserve, and unanticipated costs associated with the migration crisis in Europe," the WTO said in a statement.
The Chinese slowdown already caused the WTO to cut its 2015 forecast for growth in Asian imports to 2.6pc, down from a 5.1pc projection in April, and Asian exports to 3.1pc from the previous 5pc forecast.
China's falling demand was one major reason why global trade shrank in the first two quarters of 2015, contracting from the previous quarter by an average of 0.7pc.
Falling demand in Brazil and oil and commodity prices also contributed.
However, year-on-year global growth for the year to date is still positive, at 2.3pc from the same period of 2014. In 2016, world trade is expected to grow by 3.9pc, a revision of the WTO's previous forecast of 4.0pc.
That rebound is predicated on Asian import growth bouncing back from 2.6pc in 2015 to 4.3pc, as well as Latin America flipping from a 5.6pc import contraction this year to 5.7pc import growth in 2016. The WTO forecasts covered trade in goods, but not trade in services. (Reuters)