NEW DELHI: Growth in the volume of world merchandise trade is expected to rebound this year from its tepid performance in 2016. World Trade Organisation (WTO) expects global trade to grow 2.4 per cent in 2017 compared with 1.3 per cent in 2016 but only if the global economy recovers as expected and Governments pursue the right policy mix.
It has further pegged global merchandise trade to grow between 2.1-4 per cent in 2018.
"Weak international trade growth in the last few years largely reflects continuing weakness in the global economy. However, if policymakers attempt to address job losses at home with severe restrictions on imports, trade cannot help boost growth and may even constitute a drag on the recovery," said WTO Director-General Roberto Azevedo after releasing trade statistics for 2016 and projections for 2017-18.
WTO noted that the unpredictable direction of the global economy in the near term and the lack of clarity about Government action on monetary, fiscal and trade policies raises the risk that trade activity will be stifled.
"A spike in inflation leading to higher interest rates, tighter fiscal policies and the imposition of measures to curtail trade could all undermine higher trade growth over the next two years," the WTO said in its report. In 2016, the weak trade growth of just 1.3% was partly due to cyclical factors as economic activity slowed across the board.
The most trade-intensive components of global demand were particularly weak last year as investment spending slumped in the United States and as China continued to rebalance its economy away from investment and toward consumption, dampening import demand.
"Global economic growth has been unbalanced since the financial crisis, but for the first time in several years all regions of the world economy should experience a synchronized upturn in 2017. This could reinforce growth and provide an additional boost to trade," it said.