No Improvement in World Trade in 2016, Only 2.8% Growth

Growth in 2017 may be 3.6%, Improvement of 8 Points

• World merchandise trade volume expected to grow by 2.8% in 2016, unchanged from 2.8% in 2015, as GDP eases in developed economies and picks up in developing ones.

• Trade growth should accelerate to 3.6% in 2017, still below the average of 5.0% since 1990. Risks to the forecast are tilted to the downside, including further slowing in emerging economies and financial volatility.

• South America recorded the weakest import growth of any region in 2015 as a severe recession in Brazil depressed demand.

• Developed economies lagg behind developing countries in 2015, with 2.6% volume growth in developed and 3.3% in the developing.

• Developed economies imports surged 4.5% last year while developing countries stagnated at 0.2%.

• A sharp trade slowdown affected all regions in 2015Q2 but was mostly reversed by the end of the year.

Growth in the volume of world trade is expected to remain sluggish in 2016 at 2.8%, unchanged from the 2.8% increase registered in 2015. Imports of developed countries should moderate this year while demand for imported goods in developing Asian economies should pick up. Global trade growth should rise to 3.6% in 2017, WTO economists reported on 7 April.

Risks to this forecast are mostly on the downside, including a sharper than expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements. On the other hand, there is some upside potential if monetary support from the European Central Bank succeeds in generating faster growth in the euro area.

“Trade is still registering positive growth, albeit at a disappointing rate,” WTO Director-General Roberto Azevêdo said. “This will be the fifth consecutive year of trade growth below 3%. Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow.”

“However, we should keep these figures in perspective. WTO Members can take a number steps to use trade to lift global economic growth– from rolling back trade restrictive measures, to implementing the WTO Trade Facilitation Agreement. This Agreement will dramatically cut trade costs around the world, thereby potentially boosting trade by up to $1 trillion a year,” Azevêdo added. “More can also be done to address remaining tariff and non-tariff barriers on exports of agricultural and manufactured goods.”

On the basis of the forecast for 2016, world trade will have grown at roughly the same rate as world GDP for five years (at market exchange rates), rather than twice as fast as was previously the case. Such a long, uninterrupted spell of slow but positive trade growth is unprecedented, but its importance should not be exaggerated. Overall, trade growth was weaker between 1980 and 1985, when five out of six years were below 3%, including two years of outright contraction.

India Keeps 19th Position in World Exports but Moves Down to 13th Place in World Imports China Maintains 1st in Exports with 13.8% World Share Merchandise Trade: Leading Exporters and Importers, 2015
$bn and %
Rank 2015	Rank 2014	Exporters	Value	Share	Annual % change	Rank 2015	Rank 2014	Importers	Value	Share	Annual% change
1	(1)	China	2275	13.8	-2.9	1	(1)	United States	2308	13.8	- 4.3
2	(2)	United States	1505	9.1	-7.1	2	(2)	China	1682	10.0	-14.2
3	(3)	Germany	1329	8.1	-11.0	3	(3)	Germany	1050	6.3	-13.0
4	(4)	Japan	625	3.8	-9.5	4	(4)	Japan	648	3.9	-20.2
5	(5)	Netherlands	567	3.4	-15.7	5	(5)	United Kingdom	626	3.7	-9.4
6	(7)	Korea, Republic of	527	3.2	-8.0	6	(6)	France	573	3.4	-15.4
7	(9)	Hong Kong, China	511	3.1	-2.6	7	(7)	Hong Kong, China	559	3.3	-6.9
		- domestic exports	13	0.1	-16.2			- retained imports	134	0.8	-10.7
		- re-exports	498	3.0	-2.2
8	(6)	France	506	3.1	-12.8	8	(8)	Netherlands	506	3.0	-14.2
9	(10)	United Kingdom	460	2.8	-8.9	9	(9)	Korea , Republic of	436	2.6	-16.9
10	(8)	Italy	459	2.8	-13.4	10	(10)	Canada a	436	2.6	-9.1
11	(12)	Canada	408	2.5	-14.0	11	(11)	Italy	409	2.4	-13.8
12	(13)	Belgium	398	2.4	-15.7	12	(14)	Mexico	405	2.4	-1.5
13	(15)	Mexico	381	2.3	- 4.1	13	(12)	India	392	2.3	-15.3
14	(14)	Singapore	351	2.1	-14.5	14	(13)	Belgium	375	2.2	-17.5
		- domestic exports	174	1.1	-19.6
		- re-exports	177	1.1	-8.7
15	(11)	Russian Federation	340	2.1	-31.6	15	(16)	Spa in	309	1.8	-13.8
16	(21)	Switzerland b	290	1.8	-6.9	16	(15)	Singapore	297	1.8	-19.0
								- retained imports c	120	0.7	-30.5
17	(20)	Chinese Taipei	285	1.7	-10.8	17	(18)	Switzerland b	252	1.5	-8.7
18	(18)	Spain	282	1.7	-13.2	18	(19)	Chines e Taipei	238	1.4	-15.7
19	(19)	India	267	1.6	-17.2	19	(20)	United Arab Emirates d	230	1.4	-8.0
20	(16)	United Arab Emirates d	265	1.6	-29.3	20	(23)	Australia	208	1.2	-12.0
21	(24)	Thailand	214	1.3	-5.8	21	(21)	Turkey	207	1.2	-14.4
22	(17)	Saudi Arabia , Kingdom of	202	1.2	- 41.1	22	(24)	Thailand	203	1.2	-11.0
23	(23)	Malaysia	200	1.2	-14.6	23	(17)	Russian Federation a	194	1.2	-37.0
24	(26)	Poland	198	1.2	-10.0	24	(25)	Poland	193	1.1	-13.9
25	(25)	Brazil	191	1.2	-15.1	25	(22)	Brazil	179	1.1	-25.2
26	(22)	Australia	188	1.1	-21.9	26	(26)	Malaysia	176	1.0	-15.7
27	(32)	Viet Nam	162	1.0	7.9	27	(29)	Saudi Arabia, Kingdom of d	172	1.0	-0.9
28	(29)	Czech Republic	158	1.0	-9.7	28	(32)	Viet Nam	166	1.0	12.3
29	(27)	Austria	152	0.9	-14.5	29	(27)	Austria	155	0.9	-14.7
30	(28)	Indonesia	150	0.9	-14.8	30	(28)	Indonesia	143	0.9	-19.9
		Total of above e	13848	84.0	-			Total of above e	13126	78.3	-
		World e	16482	100.0	-13.2			World e	16766	100.0	-12.2

a. Importers are valued f.o.b.

b. Includes gold.

c. Singapore’s retained imports are defined as imports less re exports.

d. Secretariat estimates.

e. Includes significant re exports or imports for re export.

Source: WTO Secretariat

Outlook for 2016 and 2017

The WTO’s forecast of 2.8% growth in the volume of world merchandise trade for 2016 and 3.6% trade growth for 2017 are based on consensus estimates of real GDP at market exchange rates from economic forecasters (Table 1). According to these estimates, world GDP should grow 2.4% this year and 2.7% next year, with growth slowing slightly in developed countries in 2016 and picking up modestly in developing ones.

Exports of developed and developing countries should grow at around the same rate in 2016, 2.9% in the former and 2.8% in the latter. Meanwhile, imports of developed economies are expected to outpace those of developing countries in 2016, with a 3.3% rise in the former compared to a 1.8% increase in the latter.

Asia is expected to record the fastest export growth of any region this year at 3.4%, followed by North America and Europe, each at 3.1%. South and Central America and Other regions will lag behind at 1.9% and 0.4%, respectively. North America should see its imports increase by 4.1% this year, while Asian and European imports should both register growth of 3.2%. Finally, imports of South and Central America and Other regions are set to contract again this year as oil and other commodity prices remain low, but the degree of contraction should be less.

Risks to the trade forecasts remain tilted to the downside. Business and consumer confidence has slipped recently in developed countries. As a result, forecasters now expect slower GDP growth in the European Union and the United States in 2016, followed by a rebound in 2017. Financial instability in Asia has mostly abated but could return if economic data come in above or below market expectations. On the other hand, more accommodative monetary policy from the European Central Bank could spur growth in the euro area and boost demand for goods and services, including imports.

India Keeps 8th Position Among World Service Exporters Leading exporters and importers in world trade in commercial services, 2015
$bn and %
Rank 2015	Rank 2014	Exporters	Value	Share	Annual % change	Rank 2015	Rank 2014	Importers	Value	Share	Annual % change
1	(1)	United States	690	14.8	0.0	1	(1)	United States	469	10.3	3.5
2	(2)	United Kingdom	341	7.3	- 4.7	2	(2)	China	437	9.6	14.7
3	(4)	Germany	246	5.3	-9.8	3	(3)	Germany	292	6.4	-11.5
4	(3)	France	239	5.1	-13.1	4	(4)	France	224	4.9	-11.0
5	(5)	China	229	4.9	-0.7	5	(5)	United Kingdom	205	4.5	-1.8
6	(6)	Netherlands	176	3.8	-9.5	6	(6)	Japan	174	3.8	-8.8
7	(7)	Japan	158	3.4	-0.2	7	(7)	Netherlands	166	3.6	-4.1
8	(8)	India	158	3.4	1.2	8	(9)	Ireland	151	3.3	4.5
9	(9)	Singapore	140	3.0	-7.3	9	(10)	Singapore	144	3.1	-7.6
10	(11)	Ireland	128	2.7	- 4.1	10	(8)	India a	126	2.7	-1.1
11	(10)	Spa in	118	2.5	-10.9	11	(13)	Korea , Republic of	112	2.5	-2.1
12	(14)	Switzerland	108	2.3	-7.6	12	(12)	Belgium	104	2.3	-11.2
13	(12)	Belgium	106	2.3	-12.7	13	(14)	Italy	98	2.1	-13.7
14	(15)	Hong Kong, China	104	2.2	-2.3	14	(15)	Canada	95	2.1	-10.6
15	(13)	Italy	99	2.1	-12.7	15	(16)	Switzerland	93	2.0	-5.4
16	(16)	Korea, Republic of	97	2.1	-12.7	16	(11)	Russian Federation	85	1.9	-28.3
17	(17)	Luxembourg	94	2.0	-5.6	17	(18)	Hong Kong, China	74	1.6	0.2
18	(18)	Canada	76	1.6	-10.4	18	(21)	Luxembourg	72	1.6	-6.5
19	(19)	Sweden	70	1.5	-6.2	19	(17)	Brazil	69	1.5	-19.8
20	(20)	Denmark	61	1.3	-15.9	20	(20)	Spain	63	1.4	-7.1
21	(24)	Thailand	60	1.3	9.6	21	(22)	Sweden	58	1.3	-10.8
22	(21)	Austria	60	1.3	-10.2	22	(25)	Saudi Arabia, Kingdom of	58	1.3	-6.7
23	(23)	Chinese Taipei b	56	1.2	-0.1	23	(24)	Australia	54	1.2	-14.0
24	(22)	Russian Federation	49	1.0	-24.5	24	(23)	Denmark	54	1.2	-13.7
25	(25)	Australia	48	1.0	-9.4	25	(28)	Thailand	50	1.1	-4.6
26	(27)	Turkey	46	1.0	-7.8	26	(27)	Austria	47	1.0	-11.2
27	(29)	Poland	43	0.9	-9.6	27	(26)	Norway	47	1.0	-16.1
28	(28)	Norway	41	0.9	-17.5	28	(29)	Chinese Taipei b	47	1.0	3.8
29	(31)	Malaysia	35	0.7	-17.0	29	(30)	Malaysia	40	0.9	-11.8
30	(33)	Israel	34	0.7	-2.9	30	(31)	Poland	32	0.7	-11.5
		Total of above	3910	83.6	-			Total of above	3741	81.9	-
		World	4675	100.0	-6.4			World	4570	100.0	-5.4

a. Imports adjusted to f.o.b valuation.

b. Data converted to BPM6 methodology. Manufacturing services on inputs owned by others are not covered.

… indicates unavailable or non comparable figures.

- indicates non applicable.

Note: Preliminary estimates based on quarterly statistics. Figures for a number of countries and territories have been estimated by the Secretariat.

Source: WTO and UNCTAD Secretariat

Details on trade developments in 2015

The 2015 result marks the fourth consecutive year in which growth in world merchandise trade stayed below 3.0% on an annual basis. Trade was also unusually volatile over the course of the year, falling in the second quarter in both developed and developing countries before rebounding in the final half.

The weak but still positive growth of merchandise trade volume in 2015 contrasted with the sharp decline in the dollar value of trade, which fell 13% to $16.5 trillion, down from $19 trillion in 2014. This discrepancy was mostly attributable to strong fluctuations in commodity prices and exchange rates, which were in turn driven by slowing economic growth in China, resilient fuel production in the United States, and divergent monetary policies across leading economies. Volatility in financial markets also dented business and consumer confidence and may have contributed to reduced global demand for certain durable goods.

World trade in commercial services last year registered a smaller decline in current dollar terms (exports down 6.4% to $4.7 trillion) than merchandise trade, with goods-related services such as transportation experiencing stronger declines (down 10.3% to $870 billion) than other categories. The relative strength of services is not surprising, since this type of trade tends to be less sensitive to business cycles than trade in goods.

The preliminary figure of 2.8% for world trade growth in 2015 refers to the average of merchandise exports and imports in volume terms, i.e. adjusted to account for differences in inflation and exchange rates across countries. This figure is in line with our most recent forecast of 2.8% from last September, but that forecast did not predict some regional developments.

Trade developments in 2015 by region, product and services category

The volume of world merchandise trade has grown at a slow, steady pace in recent years, but this consistency belies changes in the contributions of WTO geographic regions to trade volume growth over time.

Asia contributed more than any other region to the recovery of world trade after the financial crisis of 2008-09. However, the region’s impact on world import volume growth declined last year as the Chinese and other Asian economies cooled. Asia contributed 1.6 percentage points to the 2.3% rise in the volume of world merchandise imports in 2013, or 73% of world import growth, but in 2015 the region contributed just 0.6 percentage points to the global increase of 2.6%, or 23% of world import growth.

Asia also did more than any other region to lift merchandise export volume growth between 2011 and 2014, but its contribution fell below that of Europe in 2015. In the latest year, Asia was responsible for 1 percentage point of the 3.0% rise in world merchandise exports, or 35% of export growth, whereas Europe’s 1.3 percentage point contribution accounted for 44% of the rise.

North America’s contribution to exports growth in volume terms was close to zero in 2015 as demand for US goods slowed in Canada, Asia and South and Central America. Meanwhile, South and Central America and other regions made small positive contributions to export volume growth. The combination of increased export volumes in oil producing regions and falling imports in Asia likely contributed to falling energy prices in 2015, as oil supply outstripped energy demand, causing prices to plunge.

The WTO does not have a product breakdown of world trade growth in volume terms, but such a breakdown can be estimated for year-on-year growth in the dollar value of merchandise trade. This is shown for broad product groups in Chart 4, which illustrates that fuels and mining products were responsible for more than half of the drop in trade values in 2015, but that slowing trade in manufactures and agricultural products also contributed significantly to the overall decline. Among manufactured goods, the products where trade values notably declined in 2015 were office and telecom equipment, chemicals and other machinery (which includes investment goods and durables other than automobiles), while clothing and textiles only made a small contribution to growth.

The dollar value of intra-Asia imports of manufactured goods is estimated to have fallen around 5% in 2015, roughly in line with the decline of Asian imports of manufactured goods worldwide. This would seem to indicate a broad-based decline in trade values, perhaps more closely related to price fluctuations than to changes in production and consumption patterns. However, Asian imports of other machinery (a category that includes capital goods) registered a stronger decline of around 8%, suggesting a downturn in investment in the region. In particular, China’s imports of other machinery from Europe and North America were down 15% and 8%, respectively, in 2015 based on Secretariat estimates. This falloff in investment may be temporary, driven by financial volatility, exchange rate uncertainty and unsettled monetary policy in 2015.

It (Chart 5) illustrates growth in the dollar value of world commercial services exports since 2013 broken down by major services categories. Commercial services trade recorded a 6.4% year-on year decline in 2015, although transport services registered a larger drop of nearly 10% as prices for sea shipment of dry bulk cargo fell to record lows last year. Other types of services exports, such as travel and other commercial services (a category that include financial services) saw smaller declines of around 5.5%.

The drop in world commercial services exports was less than the 13.5% slide in the dollar value of merchandise exports, which was strongly influenced by fluctuations in primary commodity prices

According to statistics from the International Monetary Fund, primary commodity prices have fallen by more than 50% on average since January 2014, with drops of around 20% for food and beverages, 30% for metals, and 65% for energy (fuels).

There is no volume indicator for services trade akin to the WTO’s merchandise trade volume indices, but physical measures of services trade such as passenger arrivals and container port throughput point to a resumption of growth after a slowdown in the middle of 2015.