SPEECHES — DG ROBERTO AZEVÊDO
Remarks by DG Azevêdo
Welcome everyone. Good morning.
You have all seen the press release, so I'll just say a few brief words and then open for questions.
For clarity – all the figures I mention will be in volume terms unless I specify otherwise.
In 2017 trade growth stood at 4.6%. At that point we were optimistic that there was renewed dynamism and momentum in global trade. Since then leading indicators have shown momentum weakening – particularly towards the end of last year. Forecasters have been revising their numbers. And our release today now confirms that trade growth is slowing.
Trade underperformed in 2018 with growth of 3%.
And we expect even more modest growth in 2019, at just 2.6%.
There is potential for a slight improvement in 2020 – but that is very much dependent on an easing of trade tensions over this period. And this is the key point.
The fact that we don’t have great news today should surprise no one who has been reading the papers over the last 12 months. Of course there are other elements at play, but rising trade tensions are the major factor.
Over the last year we have seen a range of new tariffs put in place affecting widely-traded goods.
Trade simply cannot play its full role in driving GDP growth when levels of uncertainty are so high.
Greater uncertainty means lower investment and consumption. Investment, in particular, has a pronounced impact on trade, and this is reflected in numbers. We outlined these downside risks in our previous forecasts.
We all need trade to play its positive role supporting jobs, growth and development around the world. And we need the rules-based trading system to play its full role in facilitating trade flows and providing stability in international economic relations.
It is therefore increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today's economy.
WTO members are working on this.
They are bringing a range of issues to the table. And they are discussing ways to strengthen and safeguard the trading system. This is very welcome – and we are seeing real momentum in some of these discussions.
Today's release reflects the realities of global trade today. Our job is to try to change those realities.
So that's what I wanted to say.
Before we open for questions, I would just mention that there is a lot of useful information in this release that we don’t have time to go into now. So I encourage you to dig further into the figures. Our economists can help you with that.
For example on services, in value terms we saw growth of 8% globally in 2018. This was driven largely by strong import growth in Asia. Significantly, China saw 12% growth in imports of commercial services.
On the ratio of trade growth to GDP growth, we expect 2019 to be a ratio of 1 to 1. This could pick up slightly in 2020. And this will depend on the composition of GDP growth for 2020 – both in terms of geography and in terms of the factors driving that growth.
Our expectation is that over time the ratio will return to the long-run average of 1.4 to 1. But, again, this is dependent on some of the big political factors that I have touched upon already. For example, continued uncertainty would continue to lower investment and depress trade figures, which would impact this ratio.
So please take some time to read the release in full.
Thank you. Now I'd be happy to take some questions.