The World Trade Organization on Monday said a modest increase is expected in world trade growth next year, hopefully abandoning sluggish growth trends from the previous two years.
Overall, world trade is expected to grow by 4.7% in 2014 and at a slightly faster rate of 5.3% in 2015.
Although the 2014 forecast of 4.7% is more than double the 2.1% increase of last year, it remains below the 20-year average of 5.3%. For the past two years, growth has averaged only 2.2%.
In 2013, slow trade growth was realized due to flat import demand in developed countries and only moderate growth in developing countries. Both developed and developing economies only managed to record small, positive increases on the export side.
"For the last two years trade growth has been sluggish. Looking ahead, if GDP forecasts hold true, we expect a broad-based but modest upturn in 2014, and further consolidation of this growth in 2015," WTO Director-General Roberto Azevedo said in released statement.
He suggested that a rules update and completion of new trade agreements can further support any realized trade growth.
"Concluding the Doha round would provide a strong foundation for trade in the future, and a powerful stimulus in today's slow growth environment," Azevedo said. "We are currently discussing new ideas and new approaches which would help us to get the job done – and to do it quickly."
Factors influencing trade strength
Weakness of trade in 2013 was supported by the lingering EU recession, high unemployment in some European economies and uncertainty about the U.S. Federal Reserve's stimulus tapering.
2014, however, is likely to showcase recovery, per business surveys and industrial production data, WTO says. This recovery is largely due to continued Fed tapering on improving U.S. employment figures and improving EU outlook.
Developing economies, too, are expected to strengthen and outpace developed economies in terms of GDP and trade growth, but could face setbacks on recalibration of monetary policy.
Risks and uncertainty
Volatility is likely to be a defining feature of 2014 as monetary policy in developed economies becomes less accommodative, WTO said.
Some developed economy risks factors have receded since early 2013, including the sovereign debt crisis in Europe. Developing economies are now the focus of several gathering risks, WTO says, including overinvestment in productive capacity and rebalancing economies to rely more on domestic consumption and less on external demand.
Geopolitical risks have introduced an additional element of uncertainty to the forecast, WTO says. Civil conflicts and territorial disputes in the Middle East, Asia and Eastern Europe could provoke higher energy prices and disrupt trade flows if they escalate. However, since the timing and impact of these kinds of risks are inherently unpredictable, they are not considered directly in the WTO outlook.
Director-General Roberto Azevedo announces the WTO's annual trade statistics and forecasts at a press conference held at the WTO's headquarters.